U.S. long-term mortgage rates rose this week after three weeks of holding steady, tipped higher by expectations that the Federal Reserve could reduce interest rates soon.
Mortgage buyer Freddie Mac said Thursday the average rate on the benchmark 30-year mortgage increased to 3.81% from 3.75% last week. Those are historically low levels for the key rate, which a year ago stood at 4.52%
The average rate for 15-year, fixed-rate home loans ticked up to 3.23% from 3.22% last week.
Fed Chairman Jerome Powell sent a strong signal Tuesday that the central bank’s monetary policymakers are prepared to cut its benchmark interest rate for the first time in a decade. While the U.S. labor market remains strong, uncertainty is deepening amid slowing global economic growth and trade tensions, Powell said at a Paris economic conference.
Powell’s statements in a similar vein to Congress last week pushed the stock market to record highs and heightened expectations that the Fed will move to cut rates as soon as its next meeting on July 30-31, undoing some of the policymakers’ credit tightening from last year when they raised rates four times. Many economists believe the Fed will cut its benchmark rate, currently in a range of 2.25% to 2.5%, by a quarter-point at the July meeting and another quarter-point in September.
Freddie Mac surveys lenders across the country between Monday and Wednesday each week to compile its mortgage rate figures.
The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates.
The average fee on 30-year fixed-rate mortgages rose this week to 0.6 point from 0.5 point.
The average fee for the 15-year mortgage was unchanged at 0.5 point.
The average rate for five-year adjustable-rate mortgages increased to 3.48% from 3.46% last week. The fee held steady at 0.4 point.