Mortgage rates rise for third week
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Rates for 30-year home loans climbed to 5.03 percent this week, the third consecutive weekly increase.
The average rate inched up from 5 percent a week earlier, mortgage company Freddie Mac said Thursday. The last time the average was higher was the week of Sept. 24, when rates averaged 5.04 percent.
The average rate on a 15-year, fixed-rate mortgage rose to 4.46 percent from 4.43 percent last week, Freddie Mac said.
Rates on five-year, adjustable-rate mortgages averaged 4.42 percent, up from last week's 4.4 percent. Rates on one-year, adjustable-rate mortgages rose to 4.57 percent from 4.54 percent.
Home buyers can lower their rates by buying points, which amount to 1 percent of the loan total. The average for loans in Freddie Mac's survey was 0.7 points for 30-year loans and 0.6 points for 15-year, five-year and one-year loans.
"It's still a very low rate by longer-term historical standards," said George Mokrzan, senior economist at Huntington National Bank in Columbus, Ohio. "It's still very supportive of the housing market and recovery."
The Federal Reserve last year pledged to buy bonds backed by home loans in order to encourage lower mortgage rates. It increased the size of that program to $1.25 trillion in March.
The bond purchases from Fannie Mae, Freddie Mac and Ginnie Mae brought down yields on mortgage-backed securities and allowed lenders to reduce rates on new loans while still selling the securities backed by them at a profit. The plan helped drive mortgage rates to a record low of 4.78 percent twice in April.
The central bank's purchasing program is scheduled to end in the first quarter next year, the Federal Open Market Committee said in a statement Sept. 23.
Rising borrowing costs and uncertainty over whether Congress will extend a government tax credit for first-time home buyers may have contributed to a drop in mortgage applications last week. The Mortgage Bankers Association's index of applications to purchase a home or refinance fell 12 percent, and sales of new homes declined in September, the Commerce Department said Wednesday.
Mortgage applications to buy homes fell 5.2 percent in the week ended Oct. 23, and refinancings decreased 16 percent, according to the Mortgage Bankers Association.
New-home purchases in September dropped 3.6 percent to a 402,000 annual pace, lower than even the most pessimistic economist's forecast. It was the first month-to-month decline in sales since March.
