While the cost of borrowing money are still below previous record average of 6 percent for a 30-year loan, the average rate on a 30-year fixed-rate mortgage has been modestly rising and falling in the previous weeks. According to Star Tribune, mortgage buyer Freddie Mac has reported that the average rate on a 30-year fixed-rate mortgage has dipped to 3.97 percent from 4.01 percent in the week before that. This is still higher than the average rate of 3.73 percent a year ago. On the other hand, the average rate on the 15-year fixed-rate mortgages has risen from 3.24 percent last week to 3.26 percent this week.
It was stated in a previous report, that many homebuyers and analysts feared that the rate hike by the Federal Reserve will also result to a rise in the mortgage rates of long term loans. But according to a report ran by Forbes, there are many factors that affect rates on a 30-year fixed-rate mortgage and the Fed's short-term rate is only one of them. Other factors, according to Forbes, include but not limited to inflation, global reserve currency status, supply and demand of mortgage funds and etc.
Because of those factors, mortgage rates of long term loans can increase or decrease on their own with or without movement on Fed's short-term interest rates. And so, according to Star Tribune, the federal Reserve's move on short-term interest rates is not likely to raise mortgages anytime soon. In addition, it was said that the rate that banks charge each other on overnight loans will not affect mortgage rates.
As previously reported, returns on U.S. Treasury saw the lowest levels history. In a review of history from the Forbes report,
According to Star Tribune, returns on the 10-year Treasury bond dropped to 2.17 percent this week to 2.25 percent the week before that. And according to several sources, changes with the 10-year Treasury bond has more influence on Mortgage rates than Fed's short-term interest rates.