While more than one lender made minor adjustments to their mortgage rates, it wasn’t enough to be statistically significant this Wednesday morning. It’s as if lenders are holding their breath before the Federal Reserve Open Market Committee’s short-term interest rate announcement later today. Most industry insiders expect the Fed to make no move at all, but there’s always suspense hanging over the market on decision day.
“In the wake of the May employment report on June 3 — and ongoing concerns about ongoing slack in the labor market — not many housing observers are fretting about an upward move in this FOMC go-round,” John McManus, editorial director of real estate media firm Hanley Wood, tells NerdWallet. “At any rate, any upward move, now or later in the year, will be a slow, gentle, measured lift-off. When the Fed does decide to move, another 25 basis point increase will obviously have more impact on sentiment than pocket-books.”
In a survey of lenders early Wednesday, average rates for the most popular loan terms were maintaining three-year lows:
Mortgage Rates: June 15, 2016
(Change from 6/14)
30-year fixed: 3.69% APR (NC)
15-year fixed: 3.05% APR (NC)
5/1 ARM: 3.33% APR (NC)
McManus says home builders are jittery about even the slightest upward pressure on homeowners’ monthly mortgage payments, especially as they strive to offer new neighborhoods with homes in lower price ranges.
“The much higher likelihood that the Fed will continue its ‘pause’ mode will allow broader economic and gradual household wage recovery to bolster demand among entry-level buyers, for whom both the credit box and the supply of for-sale inventory seem to be expanding,” McManus adds.
Lock or float your mortgage rate?
In addition to today’s Fed interest rate decision, next week the UK votes on whether or not to remain in the European Union — a decision that could upend global stock and bond markets and ultimately steer mortgage rates higher. Barring such an outcome, most forecasts look for little change in mortgage rates through the end of the year, though short-term volatility can be expected.
As always, any decision to lock a mortgage rate should be based on the borrowers’ risk tolerance and their short- and long-term goals.
NerdWallet daily mortgage rates are an average of the lowest published APR for each loan term offered by a sampling of major national lenders. Annual percentage rate quotes reflect an interest rate plus points, fees and other expenses, providing a more accurate view of the costs a borrower might pay.
Hal Bundrick is a staff writer at NerdWallet, a personal finance website. Email: hal@nerdwallet.com. Twitter: @halmbundrick.
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