Home Loan Rates Soar For Fifth Straight Week
U.S. mortgage rates extended their recent rise, soaring upward for a fifth straight week to highs not seen in nearly a year, according to the weekly survey conducted by Freddie Mac.
This week’s jump in average interest rates on 30-year mortgages, to 6.74 percent from 6.53 percent, was the largest in more than three years, the home mortgage giant said Thursday.
Mortgage industry experts say the surge was spurred by concerns about inflation and strength in consumer and business spending.
The last time these benchmark rates were higher was July 20, 2006, when mortgage rates came in at an average of 6.80 percent.
Rates for a 30-year mortgage, the most common home loan financing product and the benchmark for the industry, have surged by 0.59 percent from 6.15 percent the week ending on May 15.
Meanwhile, 15-year mortgage rates - a popular mortgage refinance option - also soared, rising to 6.43 percent from 6.22 percent.
That mortgage rate is the highest since 6.44 percent on July 6 of last year.
“These (home loan rate) moves parallel rising yields on U.S. securities, as concerns about inflation pressures along with continuing strength of consumer and business spending have dimmed hopes for an interest rate cut,” said Frank Nothaft, Freddie Mac V.P. and chief economist.
“Higher mortgage rates may weigh in on the housing market’s gradual recovery. While demand appears to have stabilized, inventories of new homes remain high, putting downward pressure on construction and home prices.”
Such increases in 30-year and 15-year mortgage interest rates meant home loans officially exceeded their year-ago levels. During the same week last year, 30-year mortgages averaged 6.63 percent and 15-year loans 6.25 percent.
This week, one-year adjustable rate mortgages (ARM) averaged 5.75 percent up from 5.65 percent last week and from 5.66 percent a year earlier.
The “5/1″ ARM, set at a fixed home loan rate for five years and adjustable each year after, averaged 6.37 percent, up from 6.24 percent last week.
On average, a mortgage lender charged an average of 0.4 percent in fees and points on 30- and 15-year mortgages, neither of which have moved since back on May 17.
Fees on the one-year ARM averaged 0.7 percent, the same as a week prior, and 0.5 points for the 5/1 ARM, down from 0.6 percent the previous week.
Freddie Mac is a mortgage company chartered by Congress that buys mortgages from lenders and packages them into securities to sell to investors, or to hold in its own portfolio.
SOURCE: Reuters