30-Year Fixed Rate Soars to 4.46% on Fed Tapering Signal

30-Year Fixed Rate Soars to 4.46% on Fed Tapering SignalThe average rate on the 30-Year fixed mortgage leaped from 3.93 percent to 4.46 percent this week on the heels of the Federal Reserve’s intention to begin tapering its bond-buying stimulus campaign.
Interest rates are following the climbing yields on Treasury bonds. The sell-off in Treasuries re-ignited last week after remarks by Fed Chairman Ben Bernanke that a pullback in the central bank’s $85 billion monthly purchases will likely begin by the end of the year.
The average 30-year fixed-rate mortgage rose jumped to 4.46 percent this week — the highest it has been since the week of July 28, 2011.
Despite the big jump, mortgage rates are historically low — although homeowners who have been sitting on the sidelines before jumping into a refinance or purchase may have been stung the hardest.
“Higher mortgage rates may dampen some housing market activity, but the effect will be muted by the high level of buyer affordability, and home sales should remain strong,” said Frank Nothaft, vice president and chief economist, Freddie Mac.
For example, Nothaft points out, existing home sales in May rose to its strongest pace since November 2009 and new home sales were the most seen since July 2008.
In addition, the 12-month growth in S&P/Case-Shiller’s 20-city home-price index for April of 12.1 percent was the largest since April 2006.
But this data preceded the Fed remarks and the trouncing of Treasuries over the past few days. Fence-sitters who are now motivated may keep sales and refinance activity at healthy levels until a clearer path on interest rates emerges.
Here is Freddie Mac’s overview of mortgage rates for the week:
30-year fixed-rate mortgage averaged 4.46 percent, with an average 0.8 point, for the week ending June 27, 2013, up from last week when it averaged 3.93 percent. Last year at this time, the 30-year FRM averaged 3.66 percent.
15-year fixed rate averaged 3.50 percent, with an average 0.8 point, up from last week when it averaged 3.04 percent. A year ago at this time, the 15-year FRM averaged 2.94 percent.
5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.08 percent, with an average 0.7 point, up from last week when it averaged 2.79 percent. A year ago, the 5-year ARM averaged 2.79 percent.
1-year Treasury-indexed ARM averaged 2.66 percent, with an average 0.5 point, up from last week when it averaged 2.57 percent. At this time last year, the 1-year ARM averaged 2.74 percent.

Leave a Reply

Your email address will not be published. Required fields are marked *