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Freddie Mac: Mortgage rates follow Treasury yields, shoot up

“Trump Tantrum” to bring a final burst in refinances?

During the week after the election, interest rates followed treasury yields and increased substantially.

“Last week’s election fell in the middle of our survey week, making it impossible to determine how closely the mortgage rate would track the post-election sell-off in the Treasury market,” Freddie Mac Chief Economist Sean Becketti said. “This week, the verdict is in—over the last two weeks the 30-year mortgage rate jumped 40 basis points to 3.94%, almost identical to the 39 basis point increase in the 10-year Treasury yield.”

Click to Enlarge

11-17-16

(Source: Freddie Mac)

The 30-year fixed-rate mortgage increased to 3.94% for the week ending Nov. 17, 2016. This is up from last week’s 3.57% and just barely below last year’s 3.97%.

Some sources put the average 30-year mortgage up even higher.

“Mortgage rates spiked above the 4% mark to 4.01% in Bankrate.com’s survey, responding to market speculation – and that’s all it is at this point – about the potential for more government borrowing, higher inflation, and faster economic growth under a Trump administration,” Bankrate.com Chief Financial Analyst Greg McBride said.

“This week’s increase in mortgage rates, being dubbed the ‘Trump Tantrum’, is the biggest one week increase since the ‘Taper Tantrum’ in June 2013,” McBride said.

Why is Trump’s election causing this uptick in interest rates? Experts explain here.

The 15-year FRM increased to 3.14%, up from last week’s 2.88% but down slightly from last year’s 3.18%.

The five-year Treasury-indexed hybrid adjustable-rate mortgage increased to 3.07%, up from last week’s 2.88% and, believe it or not, up from last year’s 2.98%.

“If rates stick at these levels, expect a final burst of home sales and refinances as ‘fence sitters’ try to beat further increases, then a marked slowdown in housing activity,” Becketti said.

3d rendering of a row of luxury townhouses along a street

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