U.S. mortgage rates climbed for a third week to three-month high, pushing up borrowing costs as demand for refinancing declines.
The average rate for a 30-year fixed loan increased to 4.46 percent in the week ended today from 4.40 percent, Freddie Mac said in a statement. The average 15-year rate climbed to 3.81 percent from 3.77 percent, according to the McLean, Virginia- based mortgage-finance company.
A rise in borrowing costs from record-low levels has spurred a drop in refinancing as the U.S. housing market remains weak. The number of mortgage applications declined 16.5 percent in the week ended Nov. 26, the most this year, according to the Mortgage Bankers Association. The group’s refinancing gauge declined 21.6 percent and purchases rose 1.1 percent.
Mortgage rates have climbed after data showing a strengthening economy and on investor concern that a Federal Reserve plan to buy $600 billion of Treasuries may fail to contain borrowing costs.
Yields 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 3.97 percent as of 9:45 a.m. in New York, according to data compiled by Bloomberg. 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.
More Americans signed contracts to buy previously owned homes in October. An index of pending home resales jumped a record 10 percent after dropping 1.8 percent in September, the National Association of Realtors said today in Washington. The median forecast in a Bloomberg News survey called for a 1 percent decrease.
-With assistance from Jody Shenn in New York. Editors: Kara Wetzel, Rick Levinson