HSH.com Weekly Mortgage Rates Radar: Fed Changes Language, Rates Rise

Rates on the most popular types of mortgages moved higher this week, according to HSH.com's Weekly Mortgage Rates Radar. The average rate for conforming 30-year fixed-rate mortgages rose by five basis points (0.05 percent) to 3.90 percent. Conforming 5/1 Hybrid ARM rates increased by seven basis points, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 3.02 percent.

"The Fed closed its policy-setting meeting last week with a subtle change to the language they've been using to describe the future path for interest rates," said Keith Gumbinger, vice president of HSH.com. "The small change in wording was enough to concern markets, as it may put a December rate move back on the table."

In recent weeks, financial markets have increasingly supposed that the Fed might not make any rate change in 2015, but the new wording suggests otherwise. Where the Fed had previously characterized the future timing of a rate move with the context of "In determining how long to maintain this [federal funds] target range", the wording was changed to "In determining whether it will be appropriate to raise the target range at its next meeting"; this put a much stronger time qualifier on how soon a move might come. Since the Fed has signaled for some time that it feels any Federal Open Market Committee (FOMC) meeting may conclude with a change to rates, HSH does not feel that this signals that an imminent change will necessarily come, but rather that the "next meeting" wording will become a long-term fixture until monetary policy approaches something closer to historically normal. This may not happen for some time.

"That the Fed might make a move at any meeting or at any other time it sees fit shouldn't shock the market," adds Gumbinger. "Economic conditions, job growth and inflation trends will dictate if the Fed makes a move. Currently, overall growth and inflation are fairly soft, so at the moment there's no strong expectation that the Fed will make move soon. That said, data released in the coming weeks will be key in this regard."

For more analysis on mortgage rates, economic conditions and the Fed, see HSH.com's weekly MarketTrends newsletter. For a longer-range outlook for mortgage rates, see HSH.com's new Two-Month Forecast.

Average mortgage rates and points for conforming residential mortgages for the week ending November 03, according to HSH.com:

Conforming 30-year fixed-rate mortgage

• Average Rate:   3.90 percent
• Average Points: 0.16

Conforming 5/1-year adjustable-rate mortgage

• Average Rate:   3.02 percent
• Average Points: 0.10

Average mortgage rates and points for conforming residential mortgages for the previous week ending October 27 were, according to HSH.com: Conforming 30-year fixed-rate mortgage

• Average Rate:   3.85 percent
• Average Points: 0.15

Conforming 5/1-year adjustable-rate mortgage

• Average Rate:   2.95 percent
• Average Points: 0.09

Methodology

The Weekly Mortgage Rates Radar reports the average rates and points offered on conforming 30-year fixed-rate mortgages and conforming 5/1 ARMs. The weekly mortgage rate survey covers a large sample of mortgage lenders and is conducted over a Wednesday-to-Tuesday cycle, with data released every Wednesday. HSH.com's survey helps consumers find the best rates on home loans in changing market conditions. Unlike mortgage rate surveys that report average rates only, the Weekly Mortgage Rates Radar's inclusion of both average rates and average points provides a more accurate view of mortgage terms currently offered by lenders.

Every week, HSH.com conducts a survey of mortgage rate data for a wide range of consumer mortgage products including ARMs, FHA-backed and jumbo mortgages, as well as home equity loans and lines of credit from hundreds of direct lenders in the U.S. For information on additional loan products, visit HSH.com.

About HSH.com

HSH.com is a trusted source of mortgage data, trends, news and analysis. Since 1979, HSH's market research and commentary has helped homeowners, buyers and sellers make smart financial choices and save money on mortgage and home equity products. HSH.com, of Riverdale, N.J., is owned and operated by QuinStreet, Inc. (NASDAQ: QNST), one of the largest Internet marketing and media companies in the world. QuinStreet is committed to providing consumers and businesses with the information they need to research, find and select the products, services and brands that best meet their needs. The company is a leader in ethical marketing practices. For more information, please visit QuinStreet.com.

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