Mortgage rates for 30-year U.S. loans rose above 4 percent for the first time in almost five months, increasing borrowing costs as fewer homeowners sought to refinance.
The average rate for a 30-year mortgage increased to 4.08 percent in the week ended today, from 3.92 percent, Freddie Mac said in a statement. The rate was the highest since Oct. 27, when it hit 4.1 percent. The average 15-year rate climbed to 3.3 percent from 3.16 percent, according to the McLean, Virginia-based mortgage-finance company.
Home-loan applications in the U.S. fell for a sixth week, reflecting the biggest slump in refinancing since November. The Mortgage Bankers Association’s index declined 7.4 percent in the period ended March 16 from the prior week, the Washington-based trade group reported yesterday. The refinance index fell 9.3 percent, while the purchase gauge dropped 1 percent.
“The effect of the higher rates should be minimal as long as the increases are limited,” Sal Guatieri, a senior economist at BMO Capital Markets in Toronto, said in an interview yesterday. “Refinancings could take a further hit but they’re up hugely in the past year. I doubt applications for purchases of a home would be affected much. Affordability has never been better.”
Sales of previously owned U.S. houses held close to an almost two-year high in February, according to a report yesterday by the National Association of Realtors. Purchases dropped 0.9 percent to a 4.59 million annual rate from a revised 4.63 million pace in January.