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Mortgage rates are rising again – although the Fed has just lowered interest rates



Mortgage rates rose again – an example of how the Federal Reserve Guideline may have a limited impact on the mortgage market Base points from the previous week, Freddie Mac

FMCC, -2.70%

reported on Thursday. It's the first time since April that interest rates have gone up in three consecutive weeks.

Despite the increase, the interest rate on the 30-year mortgage remains one full percentage point lower than it was a year ago.

According to Freddie Mac, the 1

5-year fixed-rate mortgage rose by one basis point to an average of 3.19%. The 5/1 variable rate mortgage averaged 3.43%, up three basis points from a week ago.

This increase in mortgage rates, although the Fed announced yesterday to cut interest rates, is not surprising. If the Federal Reserve adjusts interest rates, it will affect short-term interest rates.

Do Not Miss: According to the regulator, the shareholders of Fannie Mae and Freddie Mac are "wiped out" when needed.

Mortgage rates, on the other hand, are longer-term interest rates. They generally follow the direction of the 10-year Treasury note

TMUBMUSD10Y, -5.07% .

The yield on 10-year government bonds rose before the Fed's decision, although it has since fallen.

Other factors also influence the interest rates that mortgage lenders offer to consumers. Overall, consumer spending has remained strong lately, which is a reflection of the healthy labor market.

"Buying activity remains strong, indicating an obvious demand for homebuyers," said Sam Khater, Chief Economist of Freddie Mac, in the report. "The lack of housing remains a major obstacle, not just for the housing market, but for the overall economic recovery."


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