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Defying Fed hike, mortgage rate remains below 4 percent

December 24, 2015

What Fed rate hike?

One week after the Federal Reserve raised short-term interest rates from record lows, the average on a 30-year fixed-rate mortgage went the other way: It dipped to 3.96 percent from 3.97 percent last week, mortgage giant Freddie Mac says.

The drop is a reminder that the Fed has only an indirect influence on long-term mortgage rates, which more closely track the yield on the 10-year U.S. Treasury note. And that rate, in turn, tends to stay down as long as inflation remains low and investors keep buying Treasurys.

The 10-year Treasury yield has declined slightly since the Fed's hike last week.

The 30-year mortgage rate was a bit lower a year ago—3.83 percent. But many analysts expect it to stay historically low for months.

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