Mortgage rates moved higher this week, a trend that is slowing home-mortgage refinancings but isn't expected to do much to hurt home sales, economists said.
Rates on benchmark 30-year fixed-rate mortgages averaged 6.3 percent for the week ended June 11, up from 6.28 percent last week, Freddie Mac said Thursday in its weekly nationwide survey of rates.
Thirty-year mortgage rates hit a low this year of 5.38 percent for the week ended March 18, but have since been moving slowly higher.
Rates for 15-year fixed-rate mortgages this week averaged 5.67 percent, up from 5.63 percent last week. Rates for one-year adjustable rate mortgages were at 4.14 percent this week, up from an average rate of 3.98 percent last week.
The recent rise in mortgage rates comes in anticipation that the Federal Reserve will raise a key short-term interest rate for the first time in four years on June 30. "All eyes will be on the Fed for the next few months at least. How aggressive or how measured the coming rates hikes are will determine the future direction of both short- and long-term mortgage rates," said Frank Nothaft, Freddie Mac's chief economist.
David Lereah, chief economist at the National Association of Realtors, is now predicting that 30-year mortgage rates will rise to 6.9 percent by the final quarter of this year, which would still be considered low by historical standards. Lereah is forecasting sales of previously owned homes to set a record this year and sales of new homes to finish close to a record high. An improved labor market should support demand for homes, he said.
This time a year ago, rates on 30-year loans averaged 5.21 percent, rates for 15-year mortgages stood at 4.60 percent and rates on one-year ARMs averaged 3.54 percent.
The nationwide averages for mortgage rates do not include add-on fees known as points. Each loan type carried an average fee of 0.7 point this week.
The recent rise in mortgages is slowing refinancing activity, which accounted for 32.6 percent of total mortgage loan applications filed last week, down from 34.3 percent in the previous week, the Mortgage Bankers Association said.
The Federal Reserve also reported Thursday that debt of American households grew at a 10.9 percent annual rate in the first quarter of this year, up from a 7.3 percent pace in the previous quarter. A pickup in mortgage borrowing and consumer credit was largely behind the first-quarter rise, the Fed said.
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