Fixed-mortgage rates ascended higher for the fifth consecutive week on concerns the Federal Reserve may slow its bond-buying program amid a strengthening economy, Freddie Mac said in a report Thursday.
The 30-year, fixed-rate mortgage came in at 3.91%, up from 3.81% last week, compared to 3.67% last year, Freddie noted in its Primary Mortgage Market Survey.
The 15-year, FRM increased to 3.03%, up from 2.98%, while rising from 2.94% last year. This marks the first time the 15-year FRM has gone above 3% in more than a year.
Meanwhile, the 5-year Treasury-indexed adjustable-rate mortgage averaged 2.74%, up from 2.66% last week and down from 2.84% a year ago.
Additionally, the 1-year Treasury-index ARM rose to 2.58% this week, compared to 2.54% last week and was also down from 2.79% a year earlier.
"Continuing market concerns that the Federal Reserve may slow its bond purchases amid a strengthening economy added upward pressure on mortgage rates this week," said Frank Nothaft, vice president and chief economist for Freddie Mac.
He added, "In its June 5th regional economic conditions report, known as the Beige Book, the Federal Reserve noted that overall economic activity increased at a modest to moderate pace over April and May in all its districts except for Dallas which indicated strong economic growth. In addition, pending home sales rose in April to its fastest pace since April 2010 and May’s consumer sentiment was revised upwards to its highest reading since July 2007."
Although mortgage rates are continuously shooting up — impacting concerns over home affordability — market experts are downplaying such concerns.
Housing affordability is currently far above past average levels, Goldman Sachs (GS) explained.
"Put differently, even if mortgage rates continue to increase from here, the median home will still be affordable to the median borrower, based on the conventional 25% debt-to-income threshold," analysts for the mega investment bank stated.
Bankrate data also shows mortgage rates inching higher.
Bankrate’s 30-year, FRM increased to 4.10% from 3.99% a week earlier.
In addition, the 15-year, FRM increased to 3.28%, up from 3.21%, while the 5/1 ARM rose to 2.93% from 2.81%.