Mortgage rates rose higher this week as investors waited to see what they could decipher from the minutes of January’s Federal Reserve meeting.
According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average climbed to 4.40 percent with an average 0.5 point. It was 4.38 percent a week ago and 4.16 percent a year ago. The 30-year fixed rate hasn’t been this high since April 2014.
The 15-year fixed-rate average ticked up to 3.85 percent with an average 0.5 point. It was 3.84 percent a week ago and 3.37 percent a year ago. The five-year adjustable rate average edged up to 3.65 percent with an average 0.4 point. It was 3.63 percent a week ago and 3.16 percent a year ago.
The Federal Reserve released the minutes from its January meeting Wednesday, too late in the week to impact Freddie Mac’s survey. The government-backed mortgage-backer aggregates rates weekly from 125 lenders from across the country to come up with national average mortgage rates.
The Fed doesn’t set mortgage rates, but its decisions influence them. With increased economic growth, increased consumer spending and an uptick in inflation, the chances the central bank will move on rates grew.
“Members agreed that the strengthening in the near-term economic outlook increased the likelihood that a gradual upward trajectory of the federal funds rate would be appropriate,” the Federal Reserve said in the minutes.
Translation: The Fed is likely to raise short-term rates in March at its next meeting.
“Mortgage rates have climbed rapidly due in part to the U.S. economy showing signs of being at full capacity, and greater federal spending following the recent tax reform and federal budget negotiations,” Aaron Terrazas, Zillow senior economist, wrote in an email. “Home shoppers thinking about buying this spring should be aware of how their mortgage rate affects the long-term costs of buying a home.”