The Washington Post - USA (2022-05-07)

11

EZ

THE

WASHINGTON

POST

.

SATURDAY,

MAY

7, 2022

ed that the Fed has no plans to

raise the federal funds rate by

75 basis points. (A basis point is

0.01 percentage point.)

It is not only rising rates that

are making home loans more

expensive. As of April 1, the

Federal Housing Finance Agency

implemented a fee increase for

some Fannie Mae and Freddie

Mac home loans. Mortgages that

the FHFA considers “high-bal-

ance” or mortgages for second

homes are now more expensive.

High-balance loans are mort-

gages above the conforming na-

tional baseline limit ($647,200).

Fees for high-balance loans in-

creased between 0.25 and

0.75 percent, tiered by loan-to-

value ratio. Fees for second-home

loans increased between 1.125

and 3.875 percent, tiered by loan-

to-value ratio.

Bankrate.com, which puts out

a weekly mortgage rate trend

index, found that half the experts

it surveyed expect rates to go up

in the coming week, but the

remainder were divided. Twenty-

five percent said rates would stay

the same, while the other 25 per-

cent said they would fall.

Michael Becker, a branch man-

ager at Sierra Pacific Mortgage, is

one who predicts rates will ease

in the coming week.

“The Fed delivered what mar-

kets were expecting today,” Beck-

the balance sheet each month,
and [Fed] Chair [Jerome H.]
Powell’s discussion in the press
conference following the meet-
ing are the influencers that mat-
ter.”
The Fed does not set mortgage
rates, but its actions tend to
influence them.
“What matters at this stage in
the cycle is not only the Fed’s
actions, but their actions as com-
pared to expectations,” Hale said.
“This means there’s both upside
and downside risk for mortgage
rates. If the Fed continues to
focus on inflation and the rate
increases and balance sheet re-
duction it believes are needed to
tame price growth, that will rein-
force the current market view
and keep mortgage rates climb-
ing.... If the Fed shows any hint
of hesitancy in its resolve to rein
in inflation, markets could ex-
pect a slower path of increases,
which would give rates a bit of
breathing room.”
Investors’ concerns that the
Fed was contemplating a bigger
rate hike pushed long-term bond
yields higher this week. The yield
on the 10-year Treasury crossed
the 3 percent mark on Monday
before closing at 2.99 percent. It
fell back to 2.93 percent on
Wednesday after Powell indicat-

RATES FROM T8

Mortgage Rates

Rates restart their rapid

ascent a fter brief pause

es,” Bob Broeksmit, MBA’s presi-

dent and chief executive, w rote in

an email. “With mortgage rates

now more than two percentage

points higher than last year,

more prospective buyers are ap-

plying for adjustable-rate mort-

gages, which typically offer a

lower rate that can still be fixed

for up to 10 years. The 9 percent

share of ARM applications in

recent weeks remains signifi-

cantly below the 30 percent share

of activity observed 15 to 20 years

ago.”

Mortgage Bankers Association

data.

The refinance index was flat,

up just 0.2 percent from the

previous week and 71 percent

lower than a year ago. The pur-

chase index rose 4 percent. The

refinance share of mortgage ac-

tivity accounted for 33.9 percent

of applications.

“Mortgage applications in-

creased for the first time since

early March, with a 4 percent

gain in purchase activity offset-

ting another decline in refinanc-

er said. “Jay Powell also ruled out

the possibility of a 75-basis-point

increase in the near future. Trea-

surys and mortgage-backed secu-

rities rallied on this comment. I

think this will help mortgage

rates improve or move lower ever

so slightly in the coming week.”

Meanwhile, mortgage applica-

tions were higher last week for

the first time in two months. The

market composite index — a

measure of total loan application

volume — increased 2.5 percent

from a week earlier, according to

WIN MCNAMEE/GETTY IMAGES

F ederal Reserve Chair Jerome H. Powell announced Wednesday that the central bank raised interest

rates by a half-percentage point in an effort to c ombat the highest inflation in 40 years.

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