Unease about the possibility of the Federal Reserve tapering its bond-buying program led mortgage rates to soar to new heights this week, according to the latest data released by Freddie Mac.
The 30-year fixed-rate average jumped to a two-year high of 4.58 percent with an average 0.8 point. It was up from 4.4 percent a week ago and 3.66 percent a year ago. Since rising to 4.51 percent in mid-July, the 30-year fixed rate had hovered between 4.31 percent and 4.4 percent.
The 15-year fixed-rate average rose to 3.6 percent with an average 0.7 point, its highest point since July 2011. It was 3.44 percent a week ago and 2.89 percent a year ago.
Hybrid adjustable rate mortgages held steady. The five-year ARM edged up slightly to 3.21 percent this week with an average 0.5 point. It was 3.23 percent a week ago. The one-year ARM was 2.67 percent with an average 0.5 point, same as a week ago.
“Fixed mortgage rates continued to follow bond yields higher,” Frank E. Nothaft, Freddie Mac vice president and chief economist, said in a statement. “In its July 30th and 31st meetings, the committee members were broadly comfortable with a plan to start reducing its bond purchases later this year, although a few emphasized the importance of being patient.
“Meeting participants acknowledged mortgage rate increases might restrain housing market activity, but several members expressed confidence the housing recovery would be resilient in the face of higher rates. In fact, existing home sales increased in July to the strongest pace since November 2009 and homebuilder confidence in August rose to its highest reading since November 2005. Both increases occurred after mortgage rates had risen from their spring-time lows.”
Meanwhile, mortgage applications continue to decline, according to the latest data from the Mortgage Bankers Association.
The Market Composite Index, a measure of total loan application volume, fell 4.6 percent from the previous week. The Refinance Index dropped 8 percent, while the Purchase Index went down 1 percent.
The refinance share of mortgage activity experienced its first movement in more than a month, falling to 62 percent of total applications. Since sinking to its lowest level in 27 months six weeks ago, it had held steady at 63 percent.