U.S. mortgage rates rose for a second week as reports of an improving economy spurred speculation that the Federal Reserve may slow stimulus efforts.
The average rate for a 30-year fixed mortgage jumped to 4.35 percent, the highest in eight weeks, from 4.16 percent, Freddie Mac said in a statement today. The average 15-year rate climbed to 3.35 percent from 3.27 percent.
Yields (USGG10YR) for 10-year Treasuries, a benchmark for home loans, jumped last week after data showed U.S. payrolls and gross domestic product grew more than economists projected. The Labor Department said employers added 204,000 jobs in October, a gain larger than the most optimistic forecast in a Bloomberg survey.
“Rates are increasing because there’s a belief that the economy is improving and the Fed will start tapering” its monthly bond purchases, Anthony Sanders, a professor of real estate finance at George Mason University in Fairfax, Virginia, said in a telephone interview yesterday. “Economic growth is always a good thing, and the sooner the Fed can start backing out, the better.”
An increase in mortgage rates from near-record lows in May has cooled buyer demand. Applications for home-purchase loans tumbled 17 percent in the past six months, according to data from the Mortgage Bankers Association.
Contracts (USPHTMOM) to buy previously owned houses dropped the most in more than three years in September, the National Association of Realtors said on Oct. 28.
To contact the reporter on this story: Prashant Gopal in Boston at email@example.com
To contact the editor responsible for this story: Kara Wetzel at firstname.lastname@example.org