In its weekly Primary Mortgage Market Survey, home lending giant Freddie Mac reported that mortgage rates for fixed-rate loans have risen for the fifth consecutive week. The mortgage lender attributes the rise to concerns that the Fed might slow down its asset purchases as the U.S. economy gains strength.
The interest rate on a 30-year fixed-rate mortgage rose from a prior week average of 3.81% to 3.91%, well above the May 2012 rate of 3.67%.
One year ago, the 15-year fixed-rate stood at 2.94%, but that rate has now jumped to $3.03%.
The interest rate on a five-year Treasury adjustable-rate mortgage loan rose from an average of 2.66% in the prior week to 2.74%, and is down from 2.84% in the same week one year ago. The one-year Treasury-indexed adjustable-rate mortgage loan interest rate rose from 2.54% to 2.58% and is down from 2.79% one year ago.
Freddie Mac’s chief economist noted:
In its June 5th regional economic conditions report, known as the Beige Book, the Federal Reserve noted that overall economic activity increased at a modest to moderate pace over April and May in all its districts except for Dallas which indicated strong economic growth. In addition, pending home sales rose in April to its fastest pace since April 2010 and May’s consumer sentiment was revised upwards to its highest reading since July 2007.
According to yesterday’s data from the Mortgage Bankers Association, new loan applications fell 11.5% last week, with the largest portion of that decline coming from a drop of 15% in refinancing. As loan rates rise, refinancings will slow and it remains to be seen if new purchase loans will take up the slack.
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