U.S. mortgage rates for 30-year loans increased for the first time in six weeks as the two-year-old housing recovery showed signs of slowing.
The average rate for a 30-year fixed mortgage was 4.28 percent this week, up from 4.23 percent, Freddie Mac said today. The average 15-year rate held at 3.33 percent, the McLean, Virginia-based mortgage-finance company said.
While job growth and tight inventories have bolstered the housing recovery, prices have climbed faster than incomes, putting real estate out of reach for some buyers. An affordability index by the National Association of Realtors -- a gauge of median prices, family incomes and mortgage rates -- fell last year from a record high in 2012. In the fourth quarter, single-family home prices rose from a year earlier in 73 percent of U.S. cities, down from 88 percent in the previous three months, the Realtors group said this week.
“As demand pulls back, I expect a reduction in price gains,” Lindsey Piegza, the Chicago-based chief economist for Sterne, Agee & Leech Inc., said in an interview yesterday. “We’ve simply reverted to the underlying modest trend, which is a best-case scenario. It allows the housing market to slowly recover and minimizes the chance of a housing bubble.”
A jump in mortgage rates from near-record lows in May has contributed to cooling demand. While the 30-year rate has retreated from a two-year high of 4.58 percent in August, borrowing costs are poised to increase as the Federal Reserve trims bond purchases that had pushed down rates.
Janet Yellen, who took over as chairman of the central bank this month, pledged this week to maintain her predecessor Ben S. Bernanke’s policies by scaling back the stimulus in “measured steps.”
To contact the reporter on this story: Prashant Gopal in Boston at firstname.lastname@example.org
To contact the editor responsible for this story: Kara Wetzel at email@example.com