U.S. Mortgage Rates Rise for First Time in 12 Weeks
Mortgage rates for 30-year U.S. loans rose for the first time in 12 weeks as Americans sought refinancings amid record-low borrowing costs.
The rate for a 30-year fixed loan climbed to 4.35 percent in the week ended today from 4.32 percent, Freddie Mac said in a statement. The average 15-year rate was unchanged at a record low 3.83 percent, the McLean, Virginia-based company said.
A five-month slide in interest rates has spurred homeowners to seek lower monthly payments, with the Mortgage Bankers Association’s index of refinancings more than doubling since the end of April. Banks, as a result, can afford to allow rates to rise slightly, said Keith Gumbinger, vice president of HSH Associates, a publisher of consumer loan data in Pompton Plains, New Jersey. A jump in prepayments may also be pushing down mortgage bonds relative to treasuries, he said.
“Refinance activity is pretty good right now, and lenders are reasonably busy,” Gumbinger said. “So there’s less of a need to slash interest rates to the bone to attract borrowers.”
Investors may also have sold bonds to buy stocks, Gumbinger said. The Standard & Poor’s 500 Index gained 3.8 percent last week as better-than-estimated growth in private employment and manufacturing raised optimism the economy will avoid a another recession.
Housing Data
Applications to purchase homes rose 6.3 percent in the week ended Sept. 3, according the Mortgage Bankers Association. Pending home sales, considered a leading indicator, unexpectedly increased in July by 5.2 percent, the National Association of Realtors said Sept. 2.
The housing market weakened after a federal tax credit for buyers expired at the end of April. Sales of previously owned homes, which make up about 90 percent of the market, fell 27 percent in July to a new low, the Realtors group said Aug. 24.
The Federal Reserve said home sales in most of its 12 districts were “very low” or “declining” following the expiration of the tax credit, according the Beige Book survey of regional conditions released yesterday.
To contact the reporter on this story: Prashant Gopal in New York at Pgopal2@bloomberg.net
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