Mortgage rates inch upward at year’s end

Mortgage rates increased this week, following a rise in Treasury yields.

Prices on the 10-year Treasury note fell this week in response to an uptick in oil prices, pushing yields higher as a result. The 10-year yield rose from around 2.22 percent Monday to 2.32 percent Wednesday.

Mortgage rates usually follow the direction of yields on long-term government bonds.

Home prices creep higher

National home prices inched up 0.9 percent — after seasonal adjustment — from September to October, according to the latest S&P/Case-Shiller home-price index. Prices increased 5.2 percent over the same month in 2014. And once again, Denver, San Francisco and Portland, Ore., and were the three cities with double-digit price gains year over year.

"The price gains are spread across the nation, as every one of the 20 large metro areas that are reported posted an increase in October, using the seasonally adjusted data," says Joel Naroff, president and chief economist for Naroff Economic Advisors in Holland, Pa.

Price appreciation should happen at a slower pace in 2016, says Pava Leyrer, chief operating officer for Northern Mortgage Services in Grandville, Mich.

"I think housing prices are going to get a little better in our area," she says. "I don't think they're going to go exponentially higher so fast that it causes a different type of problem."

A look at this week's rates

• The benchmark 30-year fixed-rate mortgage rose to 4.15 percent from 4.12 percent, according to Bankrate's Dec. 30 survey of large lenders. A year ago, it was 3.99 percent. Four weeks ago, the rate was 4.01 percent. The mortgages in this week's survey had an average total of 0.25 discount and origination points. In 2015, the 30-year fixed averaged 3.99 percent. This week's rate is 0.16 percentage points higher than the 52-week average.

• The benchmark 15-year fixed-rate mortgage rose to 3.39 percent from 3.33 percent.

• The benchmark 30-year fixed-rate jumbo mortgage rose to 4.1 percent from 4.03 percent.

• The benchmark 5/1 adjustable-rate mortgage rose to 3.49 percent from 3.44 percent.

At 4.15 percent, the 30-year finishes the year at its highest level since the July 15 survey, when it was 4.17 percent.

Pending home sales slide

Pending home sales fell 0.9 percent in November, according to data released Wednesday from the National Association of Realtors. The index is 2.7 percent higher than it was in November 2014.

"November's pending sales is a concerning number," says Michael Becker, branch manager at Sierra Pacific Mortgage in White Marsh, Ma. "They were expected to go up seven-tenths of a percent month over month, and they went down nine-tenths. Much, much worse."

However, last month's number could end up being an outlier, Becker adds.

Shape up for 2016

As you prep for the new year, keep your creditworthiness top of mind, Leyrer says. "Be responsible; understand your credit (and) make sure that you have it in an area that you want it in order to get your loan," she says.

And just because mortgage rates have inched up doesn't mean there's reason to worry — yet. On a typical $200,000 to $250,000 loan, a rate increase of one-eighth of 1 percent will likely increase your monthly payment by only $15 to $20, according to Becker.

"That shouldn't be a make-or-break deal," he says.