Thirty-year fixed rates are unchanged, while 15-year fixed and 5/1 ARM rates are higher Wednesday, according to a NerdWallet survey of mortgage rates published by national lenders this morning.
Mortgage rates have moved within a narrow range since the end of November. Today, the U.S. Federal Reserve is expected to raise short-term interest rates by one quarter of a percentage point (0.25%). Any surprise — such as a higher rate hike, or none at all — could be a catalyst for mortgage rate volatility in the coming days.
Mortgage Rates Today, Wednesday, Dec. 14
(Change from 12/13)
30-year fixed: 4.35% APR (NC)
15-year fixed: 3.71% APR (+0.03)
5/1 ARM: 3.80% APR (+0.02)
The Fed effect on mortgage rates
If the Federal Reserve bumps short-term interest rates by a quarter point (0.25%) today, what will that mean for mortgage rates? First, the interest rate that the Fed manipulates is the rate that banks use when they borrow overnight funds from each other. That’s a really short-term loan. Of course, mortgages can have terms of 15 to 30 years.
We’re talking different planets with different orbits.
But the Fed has influence. So that quarter-percentage-point short-term rate increase is likely to filter down to long-term rates sooner or later. What does that mean for homebuyers?
According to Zillow research, an increase in mortgage rates from 4% to 4.25% would mean a $22 increase in a monthly mortgage payment for the median U.S. home, valued at $191,200. The monthly mortgage payment on the typical home in 18 of the largest 35 metros would increase by just $25 or less.
“While those looking to buy a home are understandably concerned about the path of rates ahead, it’s important to remember that borrowing costs remain exceptionally low by historical standards,” Erin Lantz, vice president of mortgages for the Zillow Group, said in a release. “Rising rates may impact the location or size of the home they hope to purchase, but buyers that are fully committed to buying a home are unlikely to be swayed by the [Fed’s] decision to raise rates.”
NerdWallet daily mortgage rates are an average of the published APR with the lowest points 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 the most accurate view of the costs a borrower might pay.
Hal Bundrick is a staff writer at NerdWallet, a personal finance website. Email: firstname.lastname@example.org. Twitter: @halmbundrick.