Average long-term U.S. mortgage rates rose this week for the third straight week. Long-term rates have reversed the upward trend that took hold at the start of the year amid economic anxiety and market turbulence.
However, rates still remain at historically low levels at the start of the spring home buying season. Mortgage buyer Freddie Mac said Thursday the average rate on a 30-year, fixed-rate mortgage increased to 3.73 percent from 3.68 percent last week. The benchmark rate is closer to yet still below the 3.78 percent level it marked a year ago.
The average rate on 15-year fixed-rate mortgages rose to 2.99 percent from 2.96 percent last week.
The Federal Reserve decided this week to keep a key interest rate unchanged in light of global pressures that risk slowing the U.S. economy. As a result, Fed officials expect to raise rates more gradually this year than they had envisioned in December. The officials now foresee two, rather than four, modest increases in the benchmark short-term rate during 2016.
Prices of U.S. government bonds rose sharply after the Fed decision was announced Wednesday, reversing a decline in prices earlier in the week. The increase in bond prices pushed down the yields on the bonds, which mortgage rates track. The yield on the 10-year Treasury bond stood at 1.91 percent Wednesday, down from 1.97 percent Tuesday but above 1.88 percent a week earlier. The yield was unchanged at 1.91 percent Thursday morning.
Lower interest rates also make stocks look more attractive to investors. In contrast to the market turbulence in the first weeks of the year, U.S. stocks are now on track for their fifth straight week of gains and the Dow Jones industrial average and Standard & Poor’s 500 index closed Wednesday at their highest levels since the first trading day of the year.
To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fee for a 30-year mortgage was unchanged from last week at 0.5 point. The fee for a 15-year loan declined to 0.4 points from 0.5 points.
Rates on adjustable five-year mortgages averaged 2.93 percent this week, up from 2.92 percent last week. The fee rose to 0.5 points from 0.4 points.