The Federal Housing Finance Agency reported that mortgage rates on purchases of newly built homes (MIRS) rose by three basis points over the month of August 2018 to 4.63 percent, marking the tenth consecutive monthly increase. The FHFA contract rate for newly-built homes, also inched up one basis points to 4.63 percent in August. Information compiled by Freddie Mac suggests that mortgage rates may be increasing again after having taken a breather in July. After a slight decline in July, the 30-year FRM – Commitment rate, inched up by two basis points to 4.55 percent from 4.53 percent in July. The August increase edges the rates closer to the peak of the recent cycle, 4.59 percent.
Monetary policy continues to exert upward pressure on mortgage rates, and as expected, the Fed raised the federal funds rate to 2 percent to 2.25 percent at the September Federal Open Market Committee meeting. Considering the statement following the meeting, it is possible for another rate increases in December of this year. However, if trade tensions intensify, weighing on consumer and business confidences and the equity market, the Fed could temper the rates as a counterbalance measure.