Mortgage rates continued to rise this week, with the average on 30-year rates jumping another one-tenth of a percent in the weekly Freddie Mac rate survey.
Average interest rates on 30-year fixed-rate mortgages climbed to 3.91 percent, up from 3.81 percent last week, according to the survey. Mortgage rates have now been climbing for five consecutive weeks during that period, with the average on 30-year loans rising more than half a percentage point during that period.
The climb over that period has been nearly as great for 15-year fixed-rate loans, often used for refinancing. Average rates on 15-year fixed-rate loans rose to 3.03 percent this week, the first time 15-year rates have topped 3 percent in just over a year. Last week's average was 2.98 percent; five weeks ago the average was a record low 2.56 percent.
Initial rates on adjustable-rate mortgages (ARMs) have been climbing as well, but not as steeply as those on fixed-rate loans. The average initial rate on 5-year Treasury indexed ARMs rose to 2.74 percent this week, up from 2.68 percent last week; the average has risen less than two tenths of a point since early May, when fixed rates were bottoming out.
Fed sees strengthening economy
The sharp increases have come amid expectations the Federal Reserve will soon begin backing off its efforts to promote low interest interest rates in order to boost the economy.
"Continuing market concerns that the Federal Reserve may slow its bond purchases amid a strengthening economy added upward pressure on mortgage rates this week," said Frank Nothaft, Freddie Mac chief economist. "In its June 5th regional economic conditions report, known as the Beige Book, the Federal Reserve noted that overall economic activity increased at a modest to moderate pace over April and May in all its districts except for Dallas, which indicated strong economic growth."
Other signs of a strengthening economy this past week included the National Association of Realtors reporting that pending home sales in April rose at their fastest rate in two years and consumer sentiment hit its most optimistic level since mid-2007 in the University of Michigan's monthly survey.