Mortgage Rates Sharply Higher This Week as Fed’s Fisher Talks of Ending Quantitative Easing

Mortgage rates are on a tear, increasing rather dramatically from record lows set just a month ago. The increase in average mortgage rates this week was the sharpest increases in months for fixed conventional rates. 30 year rates are now averaging 4.16 percent, an increase of 28 basis points week over week and 15 year rates are now at 3.32 percent, an increase 29 basis points week over week.

The latest news that is sending bond yields higher and in turn mortgage rates higher, is that the Federal Reserve is poised to evaluate and possibly make changes to their purchasing bonds and mortgage backed securities. The Federal Reserve forced mortgage interest rates down to record lows by dropping the fed funds rate to near zero percent and buying $2.5 trillion in bonds to help mitigate the effects of the financial crisis on the economy and housing.

When Will Quantitative Easing (QE) End?

Loan Type

Purchase Refinance with Cash out Refinance

State

Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District Of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming

FICO Score

Superior (780-850) Exceptional (760-779) Excellent (740-759) Very Good (720-739) Good (700-719) Above Average (680-699) Average (660-679) Fair (640-659) Need Improvement (620-639) Poor (350-620)

Loan Amount

$

Points

Up to 0 points Up to 0.5 points Up to 1 points Up to 1.5 points Up to 2 points Up to 2.5 points Up to 3 points

LTV

%

Loan Term

 15-Year Fixed  20-Year Fixed  30-Year Fixed  5-Year ARM  7-Year ARM  10-Year ARM

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The lenders whose rates and other terms appear on this chart are ICB's advertising partners. They provide their rate information to our data partner RateUpdate.com. Unless adjusted by the consumer, advertisers are sorted by APR from lowest to highest. For any advertising partners that do not provide their rate they are listed in advertisement display units at the bottom of the chart. Advertising partners may not pay to improve the frequency priority or prominence of their display. The interest rates, annual percentage rates and other terms advertised here are estimates provided by those advertising partners based on the information you entered above and do not bind. Any lender Monthly payment amounts stated do not include amounts for taxes and insurance premiums. The actual payment obligation will be greater if taxes and insurance are included. Although our data partner RateUpdate.com collects the information from the financial institutions themselves, the accuracy of the data cannot be guaranteed. Rates may change without notice and can change intraday. Some of the information contained in the rate tables including but not limited to special marketing notes is provided directly by the lenders. Please verify the rates and offers before applying for a loan with the financial institution themselves. No rate is binding until locked by a lender.

Lender

APR / Rate

Fees / Points

Payment

NMLS #1835285

5.707%

15-Year Fixed

5.500%

$5,404

Includes 0.851 points for $3,404

Lender Fees: $2,000

$3,269 /mo

Next >

NMLS #1835285

6.620%

30-Year Fixed

6.500%

$5,000

Includes 0.750 points for $3,000

Lender Fees: $2,000

$2,529 /mo

Next >

NMLS #3030

6.658%

15-Year Fixed

6.500%

$4,000

Includes 1.000 points for $4,000

Lender Fees: $0

$3,485 /mo

Next >

NMLS #1835285

7.132%

5-Year ARM

7.000%

$5,328

Includes 0.832 points for $3,328

Lender Fees: $2,000

$2,662 /mo

Next >

NMLS #3030

7.350%

30-Year Fixed

7.250%

$4,000

Includes 1.000 points for $4,000

Lender Fees: $0

$2,729 /mo

Next >

Rate data provided by RateUpdate.com. Displayed by ICB, a division of Mortgage Research Center, NMLS #1907, Equal Housing Opportunity. Payments do not include taxes and insurance premiums. Actual payments will be greater with taxes and insurance included. Rate and product details.

The Federal Reserve is currently buying $85 billion a month in bonds and mortgage backed securities but if the president of the Dallas Federal Reserve Bank, Richard Fisher, had his way, the purchases would end sooner than later. In remarks for the C.D. Howe Institute Directors' Dinner in Toronto, Fisher said the following:

Act IV, just beginning, will involve the drama of introspection, with the FOMC evaluating the utility of its navigational tactics, and, perhaps, fine-tuning them, if not altering the course. Only time will reveal the efficacy of current policy and whether the risks that I and more experienced observers like Paul Volcker fret over are as substantial as we surmise, or whether we have made much ado about nothing.

Fisher has been a more vocal critic of quantitative easing and the future effects the easing will cause on inflation. Fisher, who isn't a voting member of the committee this year was against the QE3 due to his concern about the effects it will cause on future inflation. When the Fed will actually end QE3 is still up in the air but Fed Chairman, Ben Bernanke, and the majority of voting members are not as concerned as Fisher is about ending the easing.

Next Federal Open Market Committee Meeting (FOMC) June 18-19

We will be able to glean more about what the FOMC will do about easing this month as the next meeting is scheduled to take place June 18-19. The Fed has already stated they plan to keep the fed funds rate at near zero percent until the nation's unemployment rate falls below 6.5 percent. The rate in April was 7.5 percent.

There won't be any changes to the fed funds rate or quantitative easing in the June meeting but the Fed might say they plan to slow purchases or even set a date for ending easing. If either of these happens, you can expect current mortgage rates to move even higher from these levels.

Current Mortgage Rates Still Low, Historically Speaking

30 year mortgage rates today at 4.16 percent on average are still low historically speaking, even though rates are almost up 100 basis points from the record low set earlier this year. Plus there are lenders offering 30 year rates below 4.00 percent if you're willing to pay points on a loan. The same is true for 15 year rates, there are lenders quoting rates as low as 2.50 percent with points.

30 year jumbo mortgage rates are averaging 4.24 percent, an increase from the prior week's average 30 year jumbo mortgage rate of 4.10 percent. Average 15 year jumbo rates are at 3.66 percent, an increase from the prior week's average rate of 3.49 percent.

Higher Refinance Rates Kill Demand for Refinancing Mortgages

In the last four consecutive Weekly Application Surveys released by the Mortgage Bankers Association, refinance application loan demand has dropped as refinance rates have increased. In the survey released May 29, the MBA's Refinance Index dropped 12 percent, the biggest drop this year and the index is at the lowest point since December of 2012.

Although rates are higher this month, if you're thinking about buying a home, now is probably the best time ever. Home prices are still low. In many markets, home prices are still down 40 percent to 50 percent from the bubble peak back in 2006. Today's mortgage rates are higher but are still low by historical standards. Back in the early 1980's, 30 year conforming rates were as high as 17 percent, so a 4 percent 30 year mortgage rate today is still low.

You can search for and compare mortgage rates here: mortgagerates.monitorbankrates.com.