Recently, the Federal Reserve announced it will be making another rate cut. This was an expected move that was well-covered in the news. However, it has had an averse effect on the mortgage market. We’ve seen mortgage interest rates go up before and after this Fed policy change was officially announced.

Short-Term vs. Long-Term Rates

Though the Federal rate does have a fairly limited direct effect on prevailing mortgage rates, it’s often more of a snowball effect as different consumer credit markets react to the rate change. You see, the Federal Reserve’s rate influences short-term loan rates. A mortgage loan is considered a long-term loan. They typically follow the 10-year Treasury note. The Treasury yield rose just before the Fed’s announcement, but has fallen lower since then.

Reviewing the Data

During the week ending on October 31, 2019, the average 30-year fixed-rate mortgage was 3.78%. This was up 3 points from the previous week and represents the third week in a row that mortgage rates rose. We haven’t seen increases like that since back in April.

The good news is that is still a rather low interest rate. In fact, the 30-year loan rate remains more than a full percentage point lower than it was in October of 2018. Meanwhile, the average 15-year fixed-rate mortgage increased to 3.19% last week and the 5/1 adjustable-rate mortgage went up three basis points to 3.43%.

Market Factors

The job market is healthy and consumer spending remains strong. There is clearly a lot of demand out there from home buyers and those looking to refinance while mortgage rates continue to stay favorable. Still, rate increases for three weeks in a row is nothing to be ignored. As mortgage lenders, we will be keeping a close eye on what’s happening in the market as the full effects of this latest Fed rate cut ripple outward.

If you are looking to buy a home or refinance your current mortgage loan with a lower interest rate or shorter loan term, call Transparent Mortgage today at (619) 701-3906. Our team is happy to answer any questions you have and get you pre-approved for a loan. It’s a good idea to lock in a great rate before any more rate hikes take place!

Beau Hodson

Beau Hodson

About the Author Since 2003, Beau has been a mortgage professional and is a leading mortgage broker and lender in San Diego. As Founder and Senior Mortgage Advisor at Transparent Mortgage, he is truly committed to serving the needs of his clients and raising industry standards for integrity and transparency.