U.S. Mortgage Rates Rise as Fed Plans to Taper StimulusPrashant Gopal
U.S. mortgage rates rose, increasing borrowing costs for homebuyers as the Federal Reserve said it will scale back bond purchases that have supported the real estate market.
The average rate for a 30-year fixed mortgage was 4.47 percent this week, up from 4.42 percent, according to a statement today from Freddie Mac. The average 15-year rate rose to 3.51 percent from 3.43 percent, the McLean, Virginia-based mortgage-finance company said.
The Federal Open Market Committee said yesterday that it will trim its monthly asset purchases starting in January, taking the first step toward unwinding the stimulus as the economy strengthens. Mortgage rates have climbed from near-record lows in May on speculation that the central bank would begin tapering the program.
“As the economy gets better, the record-low interest rates fade further into the dust,” Keith Gumbinger, vice president of HSH.com, a New Jersey-based mortgage website, said yesterday.
The 30-year average has increased from 3.35 percent in May. It reached a two-year high of 4.58 percent in August.
Higher rates have reduced demand for refinancing. A measure of applications to cut monthly payments fell 4.3 percent last week, the Mortgage Bankers Association said yesterday. The gauge is down 67 percent from the week ended May 10. The Washington-based group’s purchase measure dropped 6.1 percent last week and has fallen 17 percent in the past seven months.
Lennar Corp., the second-biggest U.S. homebuilder by market value, said rising mortgage rates, political uncertainty and price increases contributed to a slowdown in orders for its fiscal fourth quarter ended Nov. 30. Orders climbed 13 percent from a year earlier, the Miami-based company reported yesterday. In the fourth quarter of 2012, orders jumped 32 percent from a year earlier.