Interest Rates Jump from Comments by the Fed

Mortgage rates jumped up this week, propelled by remarks made at Janet Yellen’s first press conference as Federal Reserve chair.

In its weekly Primary Mortgage Market Survey, Freddie Mac reported an increase of 8 basis points in the 30-year fixed average rate, bringing up to 4.40 percent (0.6 point) for the week ending March 27. A year ago at this time, the 30-year fixed-rate mortgage (FRM) averaged 3.57 percent.

The 15-year FRM also climbed, moving up a tenth of a percentage point to an average 3.42 percent (0.6 point).

Frank Nothaft, VP and chief economist for Freddie Mac, explained the increase: “Mortgage rates rose following the uptick on the 10-year Treasury note after comments by the Federal Reserve Board Chair Janet Yellen indicated a possible increase in interest rates as soon as early 2015.”

Nothaft also pointed to relative strength in the S&P/Case-Shiller 20-city composite home price index, which saw an increase of 13.2 percent year-over-year.

Whatever the cause, the effect means “additional pressure for those local markets that are already feeling an affordability pinch,” Freddie Mac says.

Switching to adjustable-rate mortgages (ARMs), the 5-year Treasury-indexed hybrid ARM averaged 3.10 percent (0.5 point) this week, up from 3.02 percent in the last survey. On the other hand, the 1-year ARM moved down 5 basis points to 2.44 percent (0.4 point).

Meanwhile, finance website Bankrate.com measured the 30-year fixed average at 4.51 percent and the 15-year fixed at 3.56 percent, both up over the week. Also increasing was the 5/1 ARM, which climbed a tenth of a point to 3.36 percent.