WASHINGTON – Long-term U.S. mortgage rates rose this week but remained at low levels that could entice purchasers amid the current home buying season.
Mortgage buyer Freddie Mac said Thursday the average 30-year fixed-rate mortgage increased to 3.64 per cent from 3.58 per cent last week. It’s far below its level a year ago of 3.87 per cent.
The average rate on 15-year fixed-rate mortgages advanced to 2.89 per cent from 2.81 per cent.
The Federal Reserve last week gave a clear signal that an interest-rate increase is likely next month if the economy keeps improving. The disclosure of minutes of the Fed policymakers’ most recent meeting in late April tipped U.S. government bond prices sharply lower, raising long-term bond yields.
Long-term bond yields tend to influence mortgage rates. The yield on the 10-year Treasury note rose to 1.87 per cent Wednesday from 1.86 per cent a week earlier. It dipped to 1.85 per cent Thursday morning.
With low loan rates as an inducement, Americans signed more contracts to buy homes in April for the third straight month, driving pending home sales to the highest level in more than a decade. The National Association of Realtors reported Thursday that its seasonally-adjusted index of pending home sales surged 5.1 per cent last month to 116.3, the highest since 117.4 in February 2006. Pending sales contracts are a barometer of future purchases.
To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 per cent of the loan amount.
The average fee for a 30-year mortgage was 0.5 point, down from 0.6 point last week. The fee for a 15-year loan was unchanged at 0.5 point.
Rates on adjustable five-year mortgages averaged 2.87 per cent this week, up from 2.80 per cent last week. The fee was steady at 0.5 per cent.