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Mortgage Rates Radar 05/24/2016: Mortgage rates see upward bump

Rates on the most popular types of mortgages shifted a little higher this week, according to HSH.com's Weekly Mortgage Rates Radar. The average rate for conforming 30-year fixed-rate mortgages rose by four basis points (0.04 percent) to 3.71 percent. Conforming 5/1 Hybrid ARM rates increased by eight basis points, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 3.00 percent.

Possible Fed move in June or July

"Minutes from the April Fed meeting surprised markets a bit," said Keith Gumbinger, vice president of HSH.com. "The statement which closed the April meeting seemed to indicate that the central bank was in no hurry to make a change to the federal funds rate, and would be content to wait and see what developed. The minutes suggested otherwise and inferred that if the present economic pattern remains in place, it’d allow the Fed to feel comfortable in making a change in June or perhaps July."

Interest rates may drift higher

When the Fed last lifted rates in December 2015, economic growth was cooling toward a 1.4 percent rate for Gross Domestic Product. Today, in the second quarter, GDP growth seems to be returning to that level, and inflation is running several tenths of a percentage point higher now than before. Similar to December, the financial markets have quieted from a restive period; therefore, the Fed may feel confident that another small change in rates won’t cause unwanted repercussions. 

"It's somewhat more likely that the Fed will make a move in June," adds Gumbinger. "Incoming data will have much to say about whether that probability increases. In the meantime, investors need to adjust for even a slight change in the Fed’s stance which is the reason for the increase in interest rates. If incoming data on economic growth, the job market, and inflation show more gains, the rates may drift higher. However, mortgage rates remain well-anchored even with the slight uptick, and probably don't have much room to rise at the moment."

A longer range outlook can be found in HSH.com's latest Two-Month Forecast for mortgage rates.

Current mortgage rates

Average mortgage rates and points for conforming residential mortgages for the week ending May 24, according to HSH.com:

  • Conforming 30-year fixed-rate mortgage
  • Average rate: 3.71 percent

Average points: 0.19

Conforming 5/1-year adjustable-rate mortgage

  • Average rate: 3.00 percent
  • Average points: 0.13

Average mortgage rates and points for conforming residential mortgages for the previous week ending May 17 were, according to HSH.com:

Conforming 30-year fixed-rate mortgage

  • Average Rate: 3.67 percent
  • Average Points: 0.17

Conforming 5/1-year adjustable-rate mortgage

  • Average Rate: 2.92 percent
  • Average Points: 0.11

Methodology

The Weekly Mortgage Rates Radar reports the average rates and points offered on conforming 30-year fixed-rate mortgages and conforming 5/1 ARMs. The weekly mortgage rate survey covers a large sample of mortgage lenders and is conducted over a Wednesday-to-Tuesday cycle, with data released every Wednesday. HSH.com’s survey helps consumers find the best rates on home loans in changing market conditions. Unlike mortgage rate surveys that report average rates only, the Weekly Mortgage Rates Radar’s inclusion of both average rates and average points provides a more accurate view of mortgage terms currently offered by lenders.

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