Mortgage rates will stay near historic lows next year
Mortgage rates were little changed this week, and Freddie Mac doesn’t see rates rising much next year despite the Federal Reserve’s decision to raise its benchmark rate.
The company’s weekly rate report said a 30-year fixed-rate mortgage averaged 3.97 percent in the week ending Dec. 17, up from 3.95 percent last week. A year ago, 30-year rates averaged 3.80 percent.
On Wednesday, the Federal Reserve raised its benchmark interest rate a quarter of a percent, the first time in seven years that rate has increased.
“We take the Fed at its word that monetary tightening in 2016 will be gradual, and we expect only a modest increase in longer-term rates,” said Freddie Mac (OTC: FMCC) chief economist Sean Becketti. “Mortgage rates will tick higher but remain at historically low levels in 2016.”
A 15-year fix averaged 3.22 percent this week, up from 3.19 percent last week. A one-year adjustable-rate mortgage averaged 2.67 percent, up from 2.64 percent.
Freddie Mac expects home sales to remain strong in 2016, though it says refinance activity will slow.