“[Expected rate hikes] always encourage people to buy now; the perception of a rate increase will get buyers to come out of the woodwork,” Russ Glines, a broker with Century Oak Financial, told Mortgage Professional America. “It’s not really happening this time, though, because a lot of people think the rate hike won’t happen.
“I’m hearing from clients they don’t believe rates will increase.”
However, rates are, in fact, increasing in anticipation of a Fed rate hike next month.
According to Bankrate’s weekly national survey, the average 30-year fixed rate increased to 3.98% from 3.88% a week prior.
Meanwhile, the average 15-year fixed rate climbed to 3.23% from 3.13% and the average 5/1 ARM increased to 3.28% from 3.17%.
“Mortgage rates were spurred higher after the Federal Open Market Committee pointed the finger at a possible December interest rate hike,” Bankrate said. “Mortgage rates are closely related to yields on long-term government bonds, which move in advance of – rather than in response to – Fed action.
“As global economic events unfolded and the Fed repeatedly pushed back their timetable, mortgage rates and bond yields unwound most of the increase seen earlier in the year when a Fed hike seemed more likely.”
Fed chair Janet Yellen said Wednesday there was a “live possibility” of a December rate hike.
You would think the expectation of a Fed rate hike would encourage fence-sitting potential buyers to flock to the market, but that isn’t exactly happening.