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Mortgage rates rose yet again — illustrating how the Federal Reserve’s policy can have a somewhat limited effect on the mortgage market.
The 30-year fixed-rate mortgage averaged 3.78% during the week ending Oct. 31, up three basis points from the previous week, Freddie Mac FMCC, -1.35% reported Thursday. It’s the first time since April that rates have risen in three consecutive weeks.
Despite the increase, the rate on the 30-year mortgage remains over a full percentage point lower than at this same time a year ago.
The 15-year fixed-rate mortgage increased one basis point to an average of 3.19%, according to Freddie Mac. The 5/1 adjustable-rate mortgage averaged 3.43%, up three basis points from a week ago.
That mortgage rates rose even though the Fed just announced yesterday its plans to cut interest rates isn’t a surprise. When the Federal Reserve adjusts interest rates, it is influencing short-term rates.
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Mortgage rates, on the other hand, are longer-term interest rates. They generally track the direction of the 10-year Treasury note TMUBMUSD10Y, -4.14%. The 10-year Treasury yield rose in advance of the Fed’s decision, though it has moved lower since then.
Other factors also influence the rates that mortgage lenders offer consumers. Overall, consumer spending has remained strong recently, a reflection of the healthy job market.
“Purchase activity continues to show strength, indicating obvious home-buyer demand,” Sam Khater, Freddie Mac’s chief economist, said in the report. “However, the lack of housing supply remains a major barrier to not just the housing market, but the overall economic recovery.”
