Rates on the most popular types of mortgages increased slightly, according to HSH.com's Weekly Mortgage Rates Radar. The average rate for conforming 30-year fixed-rate mortgages (FRMs) rose by five basis points (0.05 percent) to 4.56 percent. Conforming 5/1 Hybrid ARM rates also increased by five basis points, closing theWednesday-to-Tuesday wraparound weekly survey at an average 3.24 percent.
"Last Wednesday, the Federal Reserve decided to begin slowing its accumulation of Treasury bonds and mortgage-backed securities, trimming the QE program by $10 billion to a current pace of $75 billion per month," said Keith Gumbinger, vice president of HSH.com. "However, the small change had little direct effect on mortgage rates, which had been moving upward already in recent weeks to news of an economy gaining some momentum."
Last summer, mortgage rates rose sharply after the Fed revealed plans to wind down this unusual economic support. Even as the Fed made no changes to the program throughout the fall, interest rates remained well above where they were prior to the Fed's revelation. As such, markets and interest rates were well positioned for the Fed to move, so the immediate effect on mortgage rates was muted.
"Much of the "damage the taper might have inflicted on mortgage rates is probably already done," added Gumbinger. "As the program's influence wanes in 2014, there may be some effect on rates, but more likely is that any increases in rates will come because the economy is improving, not specifically because the QE program is ending."
Mortgage borrowers will also get bit of a reprieve as the management of the FHFA changes on Jan. 6. Incoming head Mel Watt announced on Dec. 20 that his first action will be to delay the increase in guarantee fees (g-fees) and new risk-based loan-level pricing adjustments that were slated to kick in starting in March 2014, so rates will continue to be kept down, at least for a while longer.
Average mortgage rates and points for conforming residential mortgages for the week ending Dec. 23, according to HSH.com:
Conforming 30-year fixed-rate mortgage
►Average rate: 4.56 percent
►Average points: 0.24
Conforming 5/1-year adjustable-rate mortgage
►Average rate: 3.24 percent
►Average points: 0.12
Average mortgage rates and points for conforming residential mortgages for the previous week ending Dec. 17 were, according to HSH.com:
Conforming 30-year fixed-rate mortgage
►Average Rate: 4.52 percent
►Average Points: 0.22
Conforming 5/1-year adjustable-rate mortgage
►Average Rate: 3.19 percent
►Average Points: 0.14
