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‘Fence Sitters’ Miss Opportunity To Lock In Low Mortgage Rates

“Fence-sitters”—those prospective home buyers and homeowners who were planning to refinance—likely have missed a golden opportunity to lock in a near-record low mortgage rate this autumn.

A post-presidential election sell off in the Treasury market has caused a spike in home-loan interest rates, noted Sean Becketti, chief economist at Freddie Mac.

“Over the past two weeks the 30-year mortgage rate jumped 40 basis points to 3.94 percent, almost identical to the 39 basis-point increase in the 10-year Treasury yield,” Becketti said.

On November 17th the benchmark 30-year fixed-rate mortgage average spiked to 3.94 percent from 3.57 percent a week earlier, according to the Freddie Mac Primary Mortgage Market Survey. A year ago at this time, 30-year fixed-rate loans averaged 3.97 percent.

Fifteen-year fixed-rate loans averaged 3.14 percent on November 17th, up from 2.88 percent a week earlier. A year ago at this time, the 15-year fixed loans averaged 3.18 percent.

“If rates stick at these levels, expect a final burst of home sales and refinances as ‘fence sitters’ try to beat further increases, then a marked slowdown in housing activity,” Becketti predicted.

A survey showed Chicago-area lenders were charging a range of 3.8 percent to 4.027 percent on benchmark 30-year fixed loans on November 18th.

Economic analysts are predicting that the Federal Reserve Board is likely to hike the federal funds rate at its next meeting on December 13-14. The Fed last raised its benchmark rate in December of 2015, and it now stands between 0.25 percent and 0.5 percent.

With the job market continuing to make progress and signs of rising inflation showing up in the economy, Fed Chair Janet Yellen recently said an increase in short-term interest rates “could well become appropriate relatively soon.”

Analysts are predicting the Fed will hike the federal funds rate a quarter of 1 percentage point. The result likely will be a quarter-point increase in 30-year fixed home-loan rates, pushing them into the 4.25 percent range.

Mortgage rates hit a historical rock bottom on November 21, 2012, when the benchmark 30-year fixed mortgage average hit 3.31 percent, while 15-year fixed loans edged downward to 2.63 percent, Freddie Mac reported.

In August of 1999—when many of today’s Millennial borrowers were in grammar school—lenders were quoting 8.15 percent on a 30-year fixed mortgage.

According to Freddie Mac, benchmark 30-year mortgage rates peaked at a whopping 18.45 percent in October of 1981 during the Great Recession of the 1980s. Rates fell below 10 percent in April of 1986, and then bounced in the 9-percent to 10-percent range during the balance of the 1980s.

Archives of the now-defunct Federal Housing Finance Board show long-term mortgage rates were relatively affordable five decades ago at 5.81 percent to 5.94 percent between 1963 and 1965.

In 1966 and 1967, borrowers paid an average of 6.3 percent to 6.4 percent. In the 1960s, rates last dipped below 6.5 percent in January of 1968, when the national average hit 6.41 percent. Between 1971 and 1977, the now-defunct Illinois Usury Law held rates in the 7.6-percent to 9-percent range.

For more housing news, visit Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. Visit

“The book is Escaping Condo Jail by Sara Benson and Don DeBat. I would say that anybody thinking about buying a condo, or even anybody serving on a condo board, or anybody who has any connection to a condo, this is must reading—all 600 and something pages. Thanks a lot for a great book!”


Steve Sanders, “Your Money Matters” WGN TV, December 22, 2014

By Don DeBat

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