Mortgage Rate Trend Index

Mortgage rates overreacted to the presidential election and will drop some over the short term, say half (50%) of the industry experts polled this week by Bankrate.com. But 40% expect more increases while only 10 % predict little change.

WASHINGTON (AP) – Nov. 17, 2016 – Long-term U.S. mortgage rates climbed this week, reflecting deep declines in U.S. government bond prices in the days after Donald Trump’s election victory.

Mortgage giant Freddie Mac said Thursday the average for a 30-year fixed-rate mortgage jumped to 3.94 percent from 3.57 percent last week. That put the benchmark rate close to its year-ago level of 3.97 percent.

The 15-year fixed-rate mortgage, popular with homeowners who are refinancing, advanced to 3.14 percent from 2.88 percent.

The rate rise was powered by a sustained decline in U.S. government bond prices in the days after Trump’s victory became known early Nov. 9.

Bond investors looked toward tax cuts and beefed-up spending on infrastructure under a Trump administration, which could fuel inflation and erode Treasury bond prices. The selling wave dubbed the “Trump Dump” lifted bond yields, which move opposite to prices and influence long-term mortgage rates.

The yield on the 10-year Treasury bond jumped to 2.06 percent last Wednesday from 1.87 percent on Election Day Tuesday. By this Thursday morning, it was at 2.25 percent.

Federal Reserve Chair Janet Yellen, citing an improving economy, said again Thursday that the Fed is more likely to raise interest rates soon.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week.

The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage was unchanged from last week at 0.5 point. The fee for a 15-year loan also held steady at 0.5 point.

Rates on adjustable five-year mortgages averaged 3.07 percent, up sharply from 2.88 percent last week. The fee remained at 0.4 point.

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