Fixed-rates on mortgages soared this past week, rising alongside bond yields as the market reacted to concerns the Fed will soon taper its mortgage-bond purchases.
The 30-year, fixed-rate mortgage posted its largest weekly increase since April 17, 1987. The 30-year, FRM came in at 4.46%, up from 3.93% last week and 3.66% last year, Freddie Mac reported in its Primary Mortgage Market Survey.
The 15-year, FRM increased to 3.5%, up from 3.04% last week and a steep rebound from 2.94% last year.
Meanwhile, the 5-year Treasury-index adjustable-rate mortgage averaged 3.08%, up from 2.79% last week and an increase from 2.79% a year ago.
Additionally, the 1-year Treasury-index ARM rose to 2.66%, up from 2.57%, but down from 2.74% a year earlier.
“Following Fed chief Bernanke’s remarks on June 19th about the possible timing of reduced bond purchases, Treasury bond yields jumped over the week and mortgage rates followed. He indicated that the Fed may moderate the pace of its buying later this year and end the purchases around the middle of 2014,” said Frank Nothaft, vice president and chief economist for Freddie Mac.
He added, “Higher mortgage rates may dampen some housing market activity but the effect will be muted by the high level of buyer affordability, and home sales should remain strong. For instance, existing home sales in May rose to its strongest pace since November 2009 and new home sales were the most seen since July 2008. In addition, the 12-month growth in the S&P/Case-Shiller 20-city home price index for April of 12.1 percent was the largest since April 2006.”
Bankrate data also shows mortgage rates reaching higher levels.
Bankrate’s 30-year, FRM rose to 4.61% from 4.12% a week earlier.
In addition, the 15-year, FRM increased to 3.73%, up from 3.3%, while the 5/1 ARM rose to 3.45% from 2.99%.
However, according to the Federal Housing Finance Agency, mortgage rates stayed at lower levels in May, with the contract mortgage interest rate slightly decreasing by 0.15% to 3.4%.
Additionally, the average interest rate on a conventional, 30-year, fixed-rate mortgage of $417,000 or less hit 3.58% in May, the FHFA reported.
The average loan amount in the latest FHFA report was $280,600 in May, up from $266,500 in April.