Mortgage Rates: No Tantrums Here, Just Cheap Loans

Share on facebook
Share on twitter
Share on linkedin
Share on pinterest

Good economic news pushed mortgage rates up last week, with a 30-year fixed loan averaging 3.45 percent. A year ago, rates averaged 3.94 percent, according to Freddie Mac’s weekly survey.

mortgage rates
Source: Freddie Mac
Rates edged higher after a closely watched report on job creation came in strong, surprising economists and markets. The upbeat employment news has more people betting the Federal Reserve will raise its own short-term interest rates when it meets in September.
The Fed doesn’t control the cost of home loans, but it can affect the direction of mortgage rates. In 2013, rates shot up after Fed Chairman Ben Bernanke hinted that the central bank would ease up on its purchases of mortgage debt. Financial markets threw a “taper tantrum” that sent interest rates up and threw the housing recovery off course. mortgage rates
Source: Freddie Mac
Today, there’s a chance that improved economic news out of Europe and job growth in the U.S. might cause Janet Yellen’s Fed to raise rates more quickly than markets expect. But even if Yellen & Co. make a move, don’t fret. It’s unlikely we’ll see a repeat of the taper tantrum.
“We doubt the impact on the mortgage market would be as bad as it was in 2013” if the Fed raises rates, Wells Fargo economists wrote in a note to clients. Fed officials have been signaling that they might be ready to raise rates, so markets shouldn’t be surprised like last time. And while home loans have been cheaper in the aftermath of Brexit, they’ve been pretty stable.

The upshot

Don’t cry. Rates have held below 4 percent for 32 weeks, the second-longest run of cheap borrowing the U.S. has ever had. The record was set from March 2012 to June 2013, when the cost of a 30-year loan held below 4 percent for 65 weeks.

Borrowing will remain cheap for now and home price growth is slowing, which is good for homebuyers.

mortgage rates
Source: Freddie Mac
Share on facebook
Share on twitter
Share on linkedin
Share on pinterest
lorraine-woellertredfin-com

Senior Managing Editor, Research

Lorraine is enjoying her first real job after a career in journalism. She’s based in Washington, D.C., where she writes about housing and the economy. Before joining Redfin, Lorraine was at Bloomberg News reporting on politics, financial mayhem, housing and the economy. Her dream home is a top-floor loft with a pool, friendly neighbors and a terrace for throwing parties. Everyone's invited. Redfin is a full-service real estate brokerage that uses modern technology to make clients smarter and faster. For more information about working with a Redfin real estate agent to buy or sell a home, visit our "Why Redfin?," page.

Email Lorraine Follow Lorraine
Search for homes by state
Scroll to Top