Mortgage rates surged this past week, ending months of lethargy and sending interest rates on 30-year fixed-rate loans above 4 percent for the first time since October.
Average interest rates on 30-year fixed-rate mortgages jumped to 4.08 percent in this week's Freddie Mac rate survey, up from 3.92 percent last week. It's the first time 30-year rates have been above 4 percent since the week of October 27, when they average 4.10 percent in the Freddie Mac survey.
Interest rates on other types of mortgage loans rose sharply as well. Average rates on 15-year fixed-rate mortgages rose to 3.30 percent, up from 3.16 percent last week, and initial rates on 5-year adjustable rate mortgages (ARMs) spiked to 2.96 percent, up from 2.83 percent previously.
The sharp jumps may signal an end to a run of nearly four months when mortgage interest rates held remarkably steady at or near all-time lows.
Increases spurred by good economic news
The rising rates followed a number of positive economic developments over the past two weeks, which drove up yields on U.S. Treasury bonds, with mortgage rates following. According to Frank Nothaft, Freddie Mac chief economist, these included an upbeat assessment of the economy by the Federal Reserve and better-than-expected results from a stress test analysis of U.S. commercial banks.
Other positive economic signs include a reduced likelihood of a Greek debt default and evidence that U.S. consumers are continuing to lower their debt burdens, with homeowner's financial obligations falling to their lowest level since 1994, according to the Federal Reserve.
Interest rates reported in the Freddie Mac survey are based on loans with an 80 percent loan-to-value ratio, with 0.8 points in origination fees and discounts paid on fixed-rate loans and 0.7 points on ARMs.