Mortgage rates rise following new Fed chairman's testimony

The new Federal Reserve Board chairman's testimony in Congress was the driver of this week's mortgage rate increase, according to Freddie Mac.

The 30-year fixed-rate mortgage averaged 4.43% for the week ending March 1, up from last week when it averaged 4.4%. A year ago at this time, the 30-year fixed-rate mortgage averaged 4.1%. Rates have increased the eight consecutive weeks.

"Optimistic testimony on Capitol Hill from Federal Reserve Chairman Jerome Powell sent Treasury yields higher as Powell stated his outlook for the economy has strengthened since December," Len Kiefer, Freddie Mac's deputy chief economist, said in a press release. "Following Treasuries, the 30-year fixed mortgage rate jumped 3 basis points. The 30-year rate has been on a tear in 2018, climbing 48 basis points since the start of the year and increasing for eight consecutive weeks."

The 15-year fixed-rate mortgage this week averaged 3.9%, up from last week when it averaged 3.85%. A year ago at this time, the 15-year fixed-rate mortgage averaged 3.32%.

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.62% this week with an average 0.4 point, down slightly from last week when it averaged 3.65%. A year ago at this time, the five-year adjustable-rate mortgage averaged 3.14%.

"As we documented, historically when mortgage rates surge, housing swoons. But we think strength in the economy and pent-up housing demand should allow U.S. housing markets to post modest growth this year even with higher mortgage rates. We really have to wait for housing markets to heat up in spring, but early indications are that housing demand remains robust to these rate increases. The MBA reported in their latest weekly applications survey that home purchase mortgage originations were up 3% from a year ago," Kiefer said.