Defying Fed Hike, 30-Year Mortgage Rate Slips to 3.96 Percent

WASHINGTON (AP) -
FILE - This June 4, 2015, file photo, shows a sign indicating a site has been sold in a new home development in Nashville, Tenn. Mortgage buyer Freddie Mac said Thursday, Dec. 10, 2015, that average long-term U.S. mortgage rates edged higher during the week following three straight weeks of declines, amid expectations that the Federal Reserve will raise its key short-term interest rate next week. (AP Photo/Mark Humphrey, File)
This file photo, shows a sign indicating a site has been sold in a new home development in Nashville, Tenn. Mortgage buyer Freddie Mac said Thursday that average long-term U.S. mortgage rates slipped. (AP Photo/Mark Humphrey, File)

Who said anything about a Fed rate hike?

One week after the Federal Reserve raised short-term interest rates from record lows, the average on a 30-year fixed-rate mortgage went the other way: It dipped to 3.96 percent from 3.97 percent last week, mortgage giant Freddie Mac says.

The drop is a reminder that the Fed has only an indirect influence on long-term mortgage rates, which more closely track the yield on the 10-year U.S. Treasury note. And that rate, in turn, tends to stay down as long as inflation remains low and investors keep buying Treasurys. The 10-year Treasury yield has declined slightly since the Fed’s hike last week.

The 30-year mortgage rate was a bit lower a year ago — 3.83 percent. But many analysts expect it to stay historically low for months.