This Week in Mortgage Rates: Fed Announces No Rate Hike

By Amanda Curry · Jun 15, 2016 · rates

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Image courtesy of Flickr, Chatham House

Brexit, will make it difficult for Treasury yield and mortgage rates to rise in the upcoming weeks.

According to Freddie Mac, the 10-year Treasury yield continues to decline this week. Fed's June meeting drove investors to flee towards the safety of government bonds, driving rates down.

The Fed's decision to pause on raising rates, and the growing anticipation for Brexit, will make it difficult for Treasury yield and mortgage rates to rise in the upcoming weeks.

Mortgage rates ending as of June 16, 2016

• 30 year fixed rate mortgage from Freddie Mac averaged 3.54 percent with an average of 0.5 percent in fees for the week ending June 16, 2016, down from last week's 3.60 percent. A year ago at this time, the 30 year fixed rate mortgage averaged 4.00 percent.
• 15 year fixed rate mortgage averaged 2.81 percent with an average 0.5 percent in fees, down from last week's 2.87 percent. A year ago at this time, the 15-year fixed rate mortgage averaged 3.23 percent.
• 5 year adjustable rate mortgage averaged 2.74 percent this week with an average 0.5 percent in feed, up from last week's 2.82 percent. A year ago, the 5-year ARM averaged 3.00 percent.

	30 year fixed	15 year fixed	5 year ARM
This week's rate	3.54	2.81	2.74
Fees and Points	0.5	0.5	0.5
Margin	N/A	N/A	2.74

With mortgage rates hovering around all-time lows, there is no better time to refinance or lock in interest rates. Compare hundreds of loans at once.

Fed Announces it Will Not Raise Rates

The Federal Reserve indicated that they would rethink their plans to raise its benchmark interest rate and they stayed true to their word.

The Federal announced yesterday that they have decided to not raise interest rates on Wednesday, June 15^th, at the end of its two day meeting. The decision was on par with expectations after a brutal May jobs report. In addition, the Fed cut its forecast for US economic growth in 2016 to 2%, down from 2.2% earlier.

This is the second time this year that the Fed is reducing its expectations for US economic growth. In December, the projection was 2.4%. The projection for economic growth in 2017 was also slightly decreased. The Fed will meet in July, however, expectations are low for any action on interest rates.

Mortgage Applications Fall 2.4% Despite Low Rates

Economic concerns in the US and overseas has pushed mortgage rates low, however, mortgage application volume decreased 2.4% last week from the previous week, according to the Mortgage Bankers Association. Mortgage applications to purchase a home fell 5% from one week earlier but were 16% higher than the same week a year ago. Applications may be weaker due to a lack of homes on the market, rather than interest rate changes.

Refinancing applications, which are typically more rate-sensitive, didn't get a lift either. In fact, they fell 1%, seasonally adjusted, from the previous week. However, they are nearly 52% higher than a year ago, when interest rates are higher.

Upcoming Economic Calendar: European Referendum Vote - Brexit

The anticipation for the European Referendum Vote next Thursday, June 23, 2016, played a part in The Fed's decision to pause rates. Global movers, such as Barack Obama, Angela Merkel and Mario Draghi, are warning Britons not to vote to leave the EU. They predict that the UK will be weaker on its own economically, politically, and diplomatically.

In general, the overseas volatility has been an increasingly important factor for domestic rates markets. The onset of Brexit could have long term implications for the stability of the European Union.

Lock or Float Rates? Some Things to Consider

As always, it is important to lock in a mortgage rate based on the borrower's risk tolerance and their short and long term goals. With that being said, with the risk of rates going up in July, it may be the right time for you to lock. There's much more of a chance of rates going significantly higher than significantly lower.

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