Mortgage Rates on 30-Year U.S. Loans Surge to Three-Month High of 4.39%
U.S. Mortgage Rates Rise to 4.39% to Three-Month High
Derick E. Hingle/Bloomberg
The number of U.S. mortgage applications fell 14 percent in the week ended Nov. 12, a Mortgage Bankers Association index showed.
The number of U.S. mortgage applications fell 14 percent in the week ended Nov. 12, a Mortgage Bankers Association index showed. Photographer: Derick E. Hingle/Bloomberg
Mortgage rates for 30-year U.S. loans surged to a three-month high as bond investors grew concerned that the Federal Reserve’s plan to buy more Treasuries may fail to contain borrowing costs.
The rate for a 30-year fixed loan climbed to 4.39 percent in the week ended today from a record low 4.17 percent, Freddie Mac said in a statement. That’s the highest since the week ended Aug. 19. The average 15-year rate was 3.76 percent, the McLean, Virginia-based company said.
The $974 that would have covered the monthly payments on a $200,000 mortgage at last week’s 30-year rate will now support a loan of about $195,000. Rates had tumbled from 5.21 percent in early April to last week’s lowest level since Freddie Mac began collecting data in 1971.
Bond yields jumped as the start of the Fed’s second round of debt-buying sparked “an international and domestic political backlash,” according to Steven Abrahams, the head of securitization research at Deutsche Bank AG. The U.S. central bank said Nov. 3 that it anticipates purchasing an additional $600 billion of Treasuries through the middle of next year.
“The market apparently is discounting either the Fed’s willingness to spend the full $600 billion announced or to sustain the effort beyond June,” Abrahams, who is based in New York, said yesterday in a report.
Bond Yields Rise
Yield on mortgage securities guaranteed by government- supported Fannie Mae that most affect loan rates soared from as low as 3.27 percent on Nov. 4 to 3.8 percent on Nov. 15, according to data compiled by Bloomberg. Yields fell to 3.76 percent as of 9 a.m. today in New York.
Mortgage-bond yields help determine what lenders must charge consumers on home loans to avoid losses when selling the debt, which in turn provides cash for new lending.
The number of U.S. mortgage applications fell 14 percent in the week ended Nov. 12, a Mortgage Bankers Association index showed. Refinancing fell 17 percent, the most since early April, and purchase applications dropped 5 percent, the Washington- based group said yesterday.
U.S. housing starts fell to a 519,000 annual rate in October, the fewest since a record low reached in April 2009 and down 12 percent from a revised 588,000 in September, Commerce Department figures showed yesterday.
To contact the reporter on this story: Jody Shenn in New York at jshenn@bloomberg.net and; Prashant Gopal in New York at pgopal2@bloomberg.net
To contact the editor responsible for this story: Kara Wetzel at at kwetzel@bloomberg.net.
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