August 23, 2013 in Business

Mortgage rates highest in 2 years; housing market holds momentum

Marcy Gordon Associated Press
 
Treasury notes up

Mortgage rates are rising because they tend to follow the yield on the 10-year Treasury note. The yield has also surged on speculation that the Fed’s stimulus will slow. It rose to 2.90 percent Thursday morning, its highest level in two years.

WASHINGTON – Average U.S. rates for fixed mortgages rose this week to their highest levels in two years, driven by heightened speculation that the Federal Reserve will slow its bond purchases later this year.

Mortgage buyer Freddie Mac said Thursday that the average rate on the 30-year loan jumped to 4.58 percent, up from 4.40 percent last week. The average on the 15-year fixed loan rose to 3.60 percent from 3.44 percent. Both averages are the highest since July 2011.

Rates have risen more than a full percentage point since May. Last week’s spike comes after more Fed members signaled they could be open to reducing the bond purchases as early as September. The purchases have helped keep long-term interest rates low, including mortgage rates.

Despite the increase, mortgage rates remain low by historical standards. And recent reports suggest the jump in rates has yet to sap the housing recovery’s momentum.

In July, previously occupied homes in the U.S. sold at the fastest pace since 2009. Sales jumped 6.5 percent last month to a seasonally adjusted annual rate of 5.4 million, the National Association of Realtors reported Wednesday. Over the past 12 months, sales have surged 17.2 percent.

Last week, the National Association of Home Builders said its measure of confidence among builders rose this month to its highest level in nearly eight years.

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