30-Year Fixed Rates Spike to 5.29 Percent
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Saturday, June 6, 2009
Rates on 30-year home loans surged above 5 percent for the first time in nearly three months this week as investors pushed up rates on long-term government debt, which is closely tied to mortgage rates.
Mortgage finance giant Freddie Mac said Thursday that average rates on 30-year, fixed-rate mortgages rose to 5.29 percent this week, from an average of 4.91 percent a week earlier. It was the highest weekly average in nearly six months and the first time rates were above 5 percent since the week of March 12, when they averaged 5.03 percent.
Mortgage rates "caught up to the recent rise in long-term bond yields this week," Frank E. Nothaft, Freddie Mac vice president and chief economist, said in a statement.
The jump in rates came after the yield on the benchmark 10-year Treasury note, a barometer for interest rates on mortgages and other loans, jumped last week to a six-month high of 3.75 percent.
While signs are building that the battered U.S. housing market is beginning to stabilize, higher rates could endanger any recovery, since borrowers wouldn't be able to borrow as much money and might decide to hold off on their purchases.
Mortgage applications fell 32.5 percent last week from a week earlier, the Mortgage Bankers Association said Wednesday. Applications to refinance existing loans, which had made up about three quarters of mortgage applications earlier this spring, fell to 62.4 percent of loan volume.
Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.
The average rate on a 15-year, fixed-rate mortgage rose to 4.79 percent this week from 4.53 percent, according to Freddie Mac.
Rates on five-year, adjustable-rate mortgages inched up to 4.85 percent from 4.82 percent last week. Rates on one-year, adjustable-rate mortgages rose to 4.81 percent, from 4.69 percent.
The rates do not include add-on fees known as points. The nationwide fee averaged 0.7 point last week for 30-year and 15-year mortgages, and averaged 0.6 point for five-year and one-year, adjustable rate loans.
