Getty Businessman Ready For Higher Interest Rates
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The main fixed-rate mortgage rates are lower on the last working day of 2016. The average 30-year mortgage rate is down seven basis points, at 4.09%, which equates to a $482.62 monthly payment per $100,000 borrowed (one basis point equals one hundredth of a percentage point). A month ago, the equivalent payment would have been lower by $6.36.

The average 15-year mortgage is eight basis points lower, at 3.26%, equating to a $703.15 monthly payment per $100,000 borrowed. A month ago, the equivalent payment would have been lower by $6.30.

Rate (national average)

Today

One Month Ago

30-year fixed jumbo

4.58%

4.44%

30-year fixed

4.09%

3.98%

15-year fixed

3.26%

3.13%

30-year fixed refi

4.12%

4.02%

15-year fixed refi

3.28%

3.15%

5/1 ARM

3.41%

3.37%

5/1 ARM refi

3.60%

3.55%

5/1 ARM: ADJUSTABLE-RATE MORTGAGE WITH AN INITIAL FIXED FIVE-YEAR INTEREST RATE. DATA SOURCE: BLOOMBERG. RATES MAY INCLUDE POINTS.

Capping a roller-coaster year, the "Trump reflation" saw mortgage rates end 2016 near five-year highs

It's been a roller-coaster year for interest rates, and consequently, for mortgage rates, too. In July, in the wake of the United Kingdom's surprise rejection of membership in the European Union ("Brexit"), mortgage rates fell to within spitting distance of their all-time lows.

However, at the beginning of November, an even greater political earthquake, Donald Trump's electoral victory, set mortgage rates on a reverse course in double time. As the following graph shows, the 30-year and 15-year fixed-rate mortgage rates shot up, passing their highs for the year, and ending 2016 near their five-year highs. (The broken horizontal lines represent the most recent levels.)

Images

The "Trump reflation" has had a stunning effect on mortgage rates, abetted by the Federal Reserve's December rate hike, with expectations of three more to come next year. While there are reasons to believe rates could continue to rise next year, it's by no means a certainty.

Potential homebuyers may have "non-buyer's remorse" when they look back at the rates they could have obtained in July, but timing the bottom is impossible, whether in stocks or rates. Even after their recent run-up, mortgage rates remain very affordable by historical standards.

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