Mortgage rates on 30-year loans rise to 5.08 percent
U.S. mortgage rates climbed to the highest level in almost three months as the Federal Reserve ended a program that helped cut borrowing costs for homebuyers.
Rates for 30-year fixed loans rose to 5.08 percent for the week ended today from 4.99 percent, mortgage finance company Freddie Mac said in a statement. That’s the highest rate since the period ended Jan. 7. The average 15-year rate was 4.39 percent, according to the McLean, Virginia-based company.
Fed purchases of $1.24 trillion in securities backed by U.S. residential mortgages helped reduce rates during the last year, pushing them to a record low of 4.71 percent in December. Fixed mortgage rates probably will rise less than a quarter of a percentage point in the next three months, according to estimates by Fannie Mae and Freddie Mac. The gain would add about $30 to the monthly payment on a $250,000 mortgage.
“I don’t think the Fed is terribly worried about the handoff,” Donald Rissmiller, chief economist at Strategas Research Partners in New York, said in a telephone interview. “The housing market is seasonally picking up and I don’t think there’s any incentive for the Fed to let something short-circuit this recovery as long as it’s in their control.”
The government bond purchases from Fannie Mae, Freddie Mac and Ginnie Mae, agencies that buy home loans from lenders and package them into securities, brought down yields and allowed lenders to reduce mortgage rates while still selling the bonds at a profit. The program concluded yesterday.
The Mortgage Bankers Association’s index of mortgage applications rose 1.3 percent in the week ended March 26, the highest level since October. The portion of refinancings fell 1.3 percent. Applications to purchase a home increased 6.8 percent.
All the financial news read on Financial Watch.
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Tags: Mortgage, Mortgage Rates