Mortgage rates rose this week spurred largely by rising optimism about the Federal Reserve’s possible move at the end of the month to cut short-term interest rates.

According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average jumped to 3.81% with an average 0.6 point. (Points are fees paid to a lender equal to 1% of the loan amount and are in addition to the interest rate.) It was 3.75% a week ago and 4.52% a year ago.

The 15-year fixed-rate average rose to 3.23% with an average 0.5 point. It was 3.22% a week ago and 4.0% a year ago. The five-year adjustable rate average climbed to 3.48% with an average 0.4 point. It was 3.46% a week ago and 3.87% a year ago.

“This is a very small change in mortgage rates this week, which is the equivalent of an additional $10 per month on a $300,000 loan,” Lawrence Yun, chief economist of the National Association of Realtors, said in an interview.

“Buyers need to realize that rates may rise and fall a little bit, but historically today’s rates are very attractive and exceptionally low,” Yun added. “Buyers should be thankful, especially if they compare today’s rates to what we saw around last Thanksgiving, when rates were around 5%.”

The financial markets are anticipating the Fed will cut its benchmark interest rate at its July 31 meeting. The benchmark rate is at 2.35%, the highest it has been in more than a decade but still low by historical standards. The central bank is expected to lower the rate to 2.1% to stimulate the economy.

The Fed doesn’t set mortgage rates, but its decisions influence them. Home loan rates are more affected by the expectations of investors. If they are worried about the economy, their concerns can drive down rates.

“Mortgage rates moved higher after remaining at around the same level for about three weeks,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “The rise in rates was driven by continued improvement in consumer spending and partly due to optimism around a forthcoming cut in short term interest rates, which should provide support for business and investor sentiment.”

Meanwhile, mortgage applications decreased. According to the latest data from the Mortgage Bankers Association, the market composite index — a measure of total loan application volume — fell 1.1% from a week earlier. The refinance index rose 2% from the previous week, while the purchase index soared 21%.

The refinance share of mortgage activity accounted for half of all applications.

”Coming out of the July Fourth holiday, applications were lower overall, with purchase activity slipping almost 4%,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a statement. “Refinance applications increased, with activity reaching its highest level in a month, driven mainly by FHA refinance applications. Historically, government refinance activity lags slightly in response to rate changes.”

Saturday, November 16, 2019