The 30-year fixed-rate average is just shy of the five-year high of 4.66 percent set in May. (Matt Rourke/AP)

Mortgage rates moved higher for the fourth week in a row and show no signs of abating.

According to data released Thursday by Freddie Mac, the 30-year fixed-rate average climbed to 4.65 percent with an average 0.5 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 4.6 percent a week ago and 3.83 percent a year ago. The 30-year fixed-rate average is just shy of the five-year high of 4.66 set in May.

The 15-year fixed-rate average grew to 4.11 percent with an average 0.5 point. It was 4.06 percent a week ago and 3.13 percent a year ago. The five-year adjustable rate average decreased to 3.92 percent with an average 0.4 point. It was 3.93 percent a week ago and 3.17 percent a year ago.


“Mortgage rates shot upward this week ... a surge that many analysts regard as overdue,” said Aaron Terrazas, senior economist at Zillow. “Rates have appeared resilient to recent weak housing data, but recent housing market indicators have been weaker than anticipated and another round of soft housing data could signal a broader slowing in that critical sector of the American economy.”

Mortgage rates tend to follow the same path as long-term bonds. When bond prices fall and yields rise, home loan rates increase. The yield on the 10-year Treasury hit 3.08 on Tuesday, climbing to its highest level since May.

“Mortgage rates are rising as Treasury bond yields rise in response to strong economic data on the manufacturing and homebuilder sectors, unemployment claims and faster wage growth,” said Steven Schnall, chief executive of Quontic Bank. “Historically, mortgage rates are tied to the 10-Year Treasury yield. A robust economy makes people feel more bullish on the stock market, making Treasury bonds less attractive. As the price of Treasury bonds falls, its yield rises and mortgage rates follow.”

The Federal Reserve will meet next week and is widely expected to raise its benchmark rate. The central bank doesn’t set mortgage rates, but its decisions influence them.

“Next week’s Fed meeting is worth watching but is unlikely to have an immediate impact on the direction of mortgage rates, barring a bold and otherwise unexpected move,” Schnall said. “Mortgage rates are more closely tied to the yield on the 10-Year Treasury bond. The prime will ultimately affect the Treasury bond market, but it won’t have an immediate impact on mortgage rates.”

Bankrate.com, which puts out a weekly mortgage rate trend index, found that three-quarters of the experts it surveyed say rates will go up in the coming week. Michael Becker, branch manager at Sierra Pacific Mortgage, is one who predicts that rates will continue to increase.

“The rise in Treasury yields and mortgage rates has been relentless this month,” Becker said. “I expected a rise in rates once September rolled around, but I also expected to see some bond buyers step in once the yield on the 10-year Treasury exceeded 3 percent. But the sell-off is continuing. In this environment, it’s hard to see a bond rally in the future.”

Meanwhile, mortgage applications picked up, according to the latest data from the Mortgage Bankers Association. The market composite index -- a measure of total loan application volume – increased 1.6 percent from a week earlier. The refinance index rose 4 percent from the previous week, while the purchase index ticked up 0.3 of a percent.

The refinance share of mortgage activity accounted for 39 percent of all applications.

“While it’s been a challenging summer for home purchases due to supply constraints and increasing affordability issues, last week marked the fifth straight week with a year-over-year increase,” said Bob Broeksmit, MBA’s president and chief executive. “Also, we saw a week-over-week increase in overall applications after a few weeks of decline. Even refinance applications were up.”

Despite this recent uptick, the increased activity is expected to be short-lived.

“We’ve projected market contraction for some time, based on declining refinances alone,” said Mike Fratantoni, the MBA’s chief economist. “But in August, we revised our forecast for purchase originations lower, in response to weaker data and a reduced forecast for home starts and sales, and slower home purchase application activity from our Weekly Applications Survey. Demand is strong, but supply is not keeping pace.”

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