Row of residential homes in the snow
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Mortgage rates this week edged up slightly as Federal Reserve officials charted a course for 2018 that will likely lead to still higher rates. The average for the benchmark 30-year fixed-rate mortgage rate rose 1 basis point, or 0.01 percent, from the previous week in Bankrate’s weekly survey of lenders.The rate, at 4.09 percent, is still below the 52-week high of 4.44 percent, so it’s worth looking into a mortgage or refinance before rates are expected to rise on the heels of the Federal Reserve’s latest action.

Fed raises rates, mortgage rates to follow

Mortgage rates are likely to go up after the Federal Reserve raised its benchmark lending rate by a quarter of a percentage point to a target range of 1.25 percent to 1.5 percent on Wednesday. This benchmark indirectly affects mortgage rates but has a more immediate impact on variable rates for short-term credit, like credit cards and home equity lines of credit.

The Fed also projects raising its rate several times through 2018 due to expectations that the economy will continue to improve, despite concerns about low inflation.

“There is a lot of uncertainty about what the likely effects will be” after raising rates, said Fed Chair Janet Yellen during a press conference, following a two-day meeting with the committee. “My colleagues and I will be committed as always to evaluating incoming data and altering the outlook as appropriate.”

Would-be home buyers pull back

A recent increase in mortgage rates caused fewer people to apply for a mortgage. Mortgage loan applications fell 2.3 percent last week compared to a week earlier, according to the Mortgage Bankers Association’s latest report. Mortgage activity also tends to slow down during the holidays.

Still, mortgage rates are ending the year at lower levels than what many had expected. The latest 4.09 percent rate is still below this year’s peak of 4.44 percent in mid-March.

The benchmark 30-year fixed-rate mortgage rose this week to 4.09 percent from 4.08 percent, according to Bankrate’s weekly survey of large lenders. A year ago, it was 4.18 percent. Four weeks ago, the rate was 4.09 percent. The 30-year fixed-rate average for this week is 0.35 percentage points below the 52-week high of 4.44 percent, and is 0.14 percentage points greater than the 52-week low of 3.95 percent.

The 30-year fixed mortgages in this week’s survey had an average total of 0.30 discount and origination points.

Over the past 52 weeks, the 30-year fixed has averaged 4.15 percent. This week’s rate is 0.06 percentage points lower than the 52-week average.

  • The 15-year fixed-rate mortgage rose to 3.47 percent from 3.45 percent.
  • The 5/1 adjustable-rate mortgage rose to 3.74 percent from 3.69 percent.
  • The 30-year fixed-rate jumbo mortgage was flat at 4.15 percent.

At the current 30-year fixed rate, you’ll pay $482.62 each month for every $100,000 you borrow, up from $482.04 last week.

At the current 15-year fixed rate, you’ll pay $713.41 each month for every $100,000 you borrow, up from $712.43 last week.

At the current 5/1 ARM rate, you’ll pay $462.55 each month for every $100,000 you borrow, up from $459.72 last week.

Results of Bankrate.com’s weekly national survey of large lenders conducted December 13, 2017 and the effect on monthly payments for a $165,000 loan:

Weekly national mortgage survey
Breakdown 30-year fixed 15-year fixed 5-year ARM
This week’s rate: 4.09% 3.47% 3.74%
Change from last week: +0.01 +0.02 +0.05
Monthly payment: $796.32 $1,177.13 $763.20
Change from last week: +$0.96 +$1.62 +$4.67

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