Mortgage rates seemed to have an interesting year. After almost universal consensus on a move toward higher rates the first few months of the year instead saw a precipitous drop to long-term lows. Chalk that up to the inception of Europe’s bond buying program (and most of 2014’s improvements for that matter).
Later in the year, rates saw bigger moves higher and lower as expectations ebbed and flowed regarding the Fed rate hike. Rates like those pertaining to mortgages and longer-term US Treasuries can move more nimbly based on those expectations. The higher the likelihood of a Fed hike, the higher mortgage rates moved in anticipation. That phenomenon ultimately allowed mortgage rates to hold steady at relatively unchanged levels after the Fed finally pulled the trigger.
On average 2015’s mortgage rates were much lower than 2014’s, but unlike 2014, they were also generally moving higher. We end the year with the average conventional 30yr fixed rate quote between 4.0% and 4.25% compared to a 3.75%-4.0% range at the end of 2014. For what it’s worth, 2014 ended at the lowest rates of the year. 2015 ends with rates close to their highest levels of the year. Rates should continue to rise, on average, until the economy shows signs of stagnating. That could take months at best, or years at worst. Thankfully, any sustained move toward higher rates isn’t likely to be as sharp as historical precedent would suggest.
- On January 5, 2016