Mortgage-bond yields that lead loan rates approach 8-month high

Yields on Fannie Mae and Freddie Mac mortgage securities that guide home-loan rates rose to the highest in almost eight months amid signs the economic recovery is gaining traction. Fannie Mae’s current-coupon 30-year fixed-rate mortgage bonds climbed 0.11 percentage point to 4.67%, the highest since Aug. 10. The Federal Reserve ended its unprecedented purchases of the debt last week. The difference between yields on the Fannie Mae securities and 10-year Treasuries rose to about 0.68 percentage point. The spread reached 0.59 percentage point on March 10, the lowest since at least 1984. Treasury yields advanced after a report showed that service-industry payrolls expanded in March at the fastest pace since May 2006, helping to boost optimism that the economy is strengthening.

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