The average rate on the 30-year fixed-rate mortgage rose three basis points, the 15-year fixed went up two basis points, and the 5/1 ARM was unchanged, according to a NerdWallet survey of daily mortgage rates published by national lenders Thursday morning.
The 30-year fixed is two basis points higher than a week ago, and 46 basis points higher than it was one year ago.
Mortgage rates went up following two announcements this week. First, the head of the Federal Reserve expressed her resolve to continue raising short-term interest rates, despite low inflation. Second, the Trump administration revealed its broad outline for an overhaul of tax laws.
On Tuesday, Federal Reserve Board Chair Janet Yellen gave a speech in Cleveland about inflation and the central bank’s policy on interest rates. Since December 2015, the Fed has raised short-term rates four times, which Yellen characterized as “a gradual pace of adjustments.” The Fed raises short-term rates in part to fight inflation. Yet inflation has stubbornly remained below the central bank’s target of 2%. If you think that means the Fed may delay further rate hikes until the inflation rate moves higher, Yellen wants you to think again. She said, “it would be imprudent to keep monetary policy on hold until inflation is back to 2%.”
That statement has been interpreted as a hint that the Fed will raise short-term rates in December, for the fifth time in two years. After the speech, bond yields moved higher, carrying mortgage rates with them.
Then on Wednesday, President Trump announced a plan to cut the corporate tax rate and scale back personal tax deductions. In a speech in Indianapolis, he compared his plan to the Reagan administration’s 1986 tax overhaul, which Trump said created an economic boom in which “our economy took off, the middle class thrived.” Bond yields and mortgage rates went up following this bullish speech.
MORTGAGE RATES TODAY, THURSDAY, SEPT. 28: