Mortgage rates for U.S. loans climbed to a seven-month high, increasing borrowing costs for homebuyers in a sluggish real estate market.
The average rate for a 30-year fixed loan rose to 4.86 percent in the week ended today from 4.81 percent, Freddie Mac said in a statement. The average 15-year rate advanced to 4.2 percent from 4.17 percent, the mortgage-finance company said.
Rising home loan rates may limit homebuyer demand as housing remains a weak link for the economy. Home prices in October fell 0.8 percent from a year earlier, the largest year- over-year decline since December 2009, the S&P/Case-Shiller index of property values showed this week.
“Optimism is fading from the housing market,” Robert Shiller, an economics professor at Yale University and co- creator of the index, said on Bloomberg Television on Dec. 28.
Sales of new and existing homes rose less than economists estimated in November even as mortgage rates sank to the lowest levels on record, reports from the Commerce Department and the National Association of Realtors showed last week.
Pending home sales climbed more than forecast in November, a sign demand is recovering following a post-tax credit plunge, according to a report from the Realtors group today. The data are based on contract signings, while existing-home sales represent closings.
The rate for a 30-year loan has climbed for six of the past seven weeks amid speculation that President Barack Obama’s agreement to a two-year tax cut extension will boost economic growth and inflation. The rise pushed the monthly cost of a $300,000 loan to $1,585 from $1,462.
Borrowing costs are still near historic lows. The 30-year fixed rate averaged about 4.7 percent in 2010, the lowest on an annual basis since 1955, Frank Nothaft, Freddie Mac’s chief economist, said in a statement today.
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