Mortgage rates were off to a bumpy start in 2013, first falling to near record lows on news the economy averted the fiscal cliff, then jolting upward this week following the release of minutes from the Dec. 13, 2012 Federal Open Market Committee (FOMC) of the Federal Reserve.
The 30-year conforming rate ranged from 3.20 percent to 5.38 percent for the week. A year ago, the rate was 4.15 percent.
Meanwhile, the average rate for the 15-year fixed rate mortgage (FRM) also rose to 2.84 percent, up from 2.80 percent last week, according to Erate.com, a financial information publisher and interest rate tracker since 1999.
The high and low 15-year FRM rates were 4.24 percent and 2.37 percent, respectively and both up from last week. A year ago, the rate averaged 3.43 percent.
The average interest rate for the 30-year jumbo loan jumped most to 3.99 percent, for the week ending Jan. 8, up from 3.90 percent a week earlier. The rate was 4.68 percent a year ago. The spread ranged from 3.43 percent, at the low end, to 6.33 percent at the high end, with the low end rising.
Rhonda Porter, “The Mortgage Porter,” a loan officer with Mortgage Master Service in Kent, WA, blogged that FMOC statements may have triggered “a major sell off in the bond markets” and this week’s higher interest rates.
The FMOC meeting minutes say: “While almost all members thought that the asset purchase program begun in September had been effective and supportive of growth, they also generally saw that the benefits of ongoing purchases were uncertain and that the potential costs could rise as the size of the balance sheet increased.”
The minutes continue: “Several others thought that it would probably be appropriate to slow or to stop purchases well before the end of 2013, citing concerns about financial stability or the size of the balance sheet. One member viewed any additional purchases as unwarranted.”
The reactionary bond market sell off is evidence rates likely will rise, and perhaps sooner than expected, if the Fed ends mortgage-backed securities purchases sooner than planned, Porter suggests.
Meanwhile, from the Erate Update, the average interest rate for the 5/1 adjustable rate mortgage (ARM) was 2.96 percent, virtually unchanged from last week, at 2.97 percent. The lowest 5/1 ARM rate this week was 2.45 percent and the high 4.10 percent, with the higher end up from last week. The rate was 3.19 percent a year ago.
Both home equity rates slipped the week ending Jan. 8, with the average variable rate on home equity lines of credit (HELOC) down to 4.67 percent from 6.70 percent last week. The rate averaged 4.73 percent a year ago. The lowest HELOC rate was 2.25 percent and the high, 8.75 percent, both unchanged.
The average FRM rate on 15-year home equity loans also dropped to 6.09 percent, from 6.11 percent last week. Rates on 15-year home equity loans ranged from 2.50 percent to 9.95 percent, both unchanged. The average was 6.56 percent a year ago.
Erate’s National APR (annual percentage rates) numbers are tallied from the interest rates of some 200 mortgage originators nationwide.