Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

Full Bio →

Written by

Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

Full Bio →

Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Jun 27, 2013

Advertiser Disclosure

Advertiser Disclosure: We strive to help you make confident loan decisions. Comparison shopping should be easy. We are not affiliated with any one loan provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about loans. Our goal is to be an objective, third-party resource for everything loan related. We update our site regularly, and all content is reviewed by experts.

Home loan interest rates experienced stronger than average increases this week resulting in multiple percentage point jumps across the board.

The extraordinary weekly increases are a blowback of the remarks made by the Federal Reserve Bank of New York (Fed) last week. Last Wednesday, Fed chief Ben Bernanke predicted that the Fed will likely reduce their bond purchases in late 2013 or early 2014.

This announcement impacted the housing industry greatly by causing an upswing in the home loan interest rates.

The 30-year fixed-rate mortgage (FRM) averaged 4.34 percent, a drastic increase from 4.02 percent reported last week.

The 15-year FRM averaged 3.38 percent, an increase from 3.11 set last week.

The 5/1 adjustable-rate mortgage (ARM) interest rate averaged 3.29 percent. Last week the rate was 2.68 percent.

Bernanke said that the Fed’s current $85-billion monthly bond purchases would be reduced in late 2013 and then will likely be eliminated by the middle of 2014. Instead of following a strict timeline, the Fed stated it will act accordingly to predicted growth in the economy. If that growth does not occur at the required rate, the timeline could be pushed back.

Jon Gibson, director of mortgage and finance for, said they have been expecting the Fed’s action for awhile, but the large spike in home loan interest rates this week was a surprise.

“This is uncommon to see jumps this large,” he said.

Gibson said the Fed’s intent for reducing their bond purchases is for a slow increase in interest rates and not a rapid one. But there is another concern about the Fed announcement.

“For the overall market, the volatility is probably more of a concern than the actual increase in rates,” he said.

Although mortgage rates continue to remain at a relatively low level, Gibson said that these steady increases have not impacted consumers as much due to a lack of inventory. This problem with supply has forced average and first-time homeowners to compete against cash offers for properties.

But Gibson said there has been a recent “big jump” in inventory, which will help homebuyers.

May 2013 reports from found that inventory increased 5.82 percent over April 2013. Last year the increase was only 1.77 percent.

“It could relax some of the pressure on homebuyers,” he said. “We think homebuyers will move off the fence and into the market.”