Mortgage rates were mostly higher this week thanks to a big jump in long-term bond yields, denting the Treasury’s hopes of keeping them low to spark a housing recovery, Freddie Mac said today.
The 10-year bond yield, which economists use to track long-term mortgage rates (what causes mortgage rates to move), increased from 3.16 percent to 3.70 percent in the past five days as investors shied away from such securities and inflation worries increased.
As a result, the traditional 30-year fixed climbed to 4.91 percent from 4.82 percent during the week ending May 28, but remains below its year ago average of 6.08 percent (it’s probably a lot higher because this survey lags a bit).
The 15-year fixed averaged 4.53 percent, up from 4.50 percent a week ago, but more than a point below the 5.66 percent seen this time last year.
“Fixed-rate mortgage rates followed long-term bond yields higher this week as financial markets try to discern the state of the economy,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Consumer confidence rose again in May and represented the largest two-month rally since records began in 1967.”
“Housing continues to be a drag on the economy, however. Although single-family existing home sales rose 2.5 percent in April, inventories of homes for sale also rose to 9.6 months from 9.0 in March, according to the National Association of Realtors® (NAR). Moreover, the NAR noted that sales of distressed homes made up 45 percent of the purchases in April.”
Adjustable-rate mortgages were mixed during the week; the five-year ARM increased to 4.82 percent from 4.79 percent, while the one-year ARM slipped to 4.69 percent from 4.82 percent. A year ago, the five-year ARM averaged 5.62 percent and the one-year ARM stood at 5.22 percent.
The interest rates above are good for conforming loan amounts with loan-to-values of 80 percent (20 percent down payment). Jumbo loans continue to price higher, in the 6.50 percent range for a 30-year fixed.
(photo: sutto)
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