Mortgage rates wandered upward for third week in a row prior to the Federal Reserve’s announcement Wednesday that it was leaving its benchmark interest rate unchanged and lowering its economic forecasts.
With the Fed indicating that it expects to raise rates only two or three times this year, home loan rates are likely to remain low for the foreseeable future. That’s good news for the spring home-buying season.
The 15-year fixed-rate average rose to 2.99 percent with an average 0.4 point. It was 2.96 percent a week ago and 3.06 percent a year ago. The 15-year fixed rate has stayed under 3 percent since early February.
The five-year adjustable rate average edged up to 2.93 percent with an average 0.5 point. It was 2.92 percent a week ago and 2.97 percent a year ago.
“Treasury yields increased heading into this week’s FOMC meeting, partially in response to modestly higher inflation readings,” Sean Becketti, Freddie Mac chief economist, said in a statement.
“[T]he Fed confirmed what the market had already concluded and made no change to the Federal funds target. The Fed went further and acknowledged that economic signals have been mixed and that the pace of monetary tightening may be slower than had been assumed at the end of 2015.”
Meanwhile, higher rates pushed mortgage applications down, according to the latest data from the Mortgage Bankers Association.
The market composite index — a measure of total loan application volume – fell 3.3 percent from the previous week. The refinance index dropped 6 percent, while the purchase index inched up 0.3 percent.
The refinance share of mortgage activity accounted for 55 percent of all applications.
