Mortgage rates steady, but could rise in coming months(Read article summary)
Mortgage rates remain unchanged after Memorial Day weekend, but rates could increase in coming months as the Federal Reserve increases the short-term interest rate.
Potential homebuyers will find mortgage rates mostly unchanged after the long holiday weekend, except for adjustable rate mortgages, which moved lower. A NerdWallet survey of mortgage lenders this morning revealed the following average rates on the most popular loan terms:
Mortgage Rates: May 31, 2016
(Change from 5/27)
30-year fixed: 3.81% APR (-0.01)
15-year fixed: 3.19% APR (+0.02)
5/1 ARM: 3.46% APR (-0.04)
Federal Reserve chair Janet Yellen is making it clear that the Fed is likely to raise short-term rates in the coming months. Friday, at the Radcliffe Institute for Advanced Study at Harvard, Yellen said the move is fitting, given an improving U.S. economy.
“It’s appropriate, and I’ve said this in the past, I think for the Fed to gradually and cautiously increase our overnight interest rate over time and probably in the coming months, such a move would be appropriate.”
While the Fed doesn’t set mortgage rates, the short-term interest rate moves it orchestrates usually have a ripple effect among all interest rate terms. As banks pay higher short-term interest, they often pass the costs on to consumers by adjusting their loan rates, including mortgages.
NerdWallet daily mortgage rates are an average of the lowest advertised APR for each loan term offered by a sampling of major national lenders. Annual percentage rate quotes reflect an interest rate plus points, fees and other expenses, providing a more accurate view of the costs a borrower might pay.
This article first appeared at NerdWallet.