The average 30-year, fixed-rate mortgage jumped over 4 percent this week, the first time in seven months, following a sharp bond market selloff which sent treasury yields surging.
According to Freddie Mac’s weekly survey of average mortgage rates, the 30-year loan hadn’t hit 4 percent since the week ending November 13, 2014 when it reached 4.01 percent.
For the wee ending Thursday, June 11, the 30-year rose to 4.04 percent, up from 3.87 percent the previous week.
“Markets are responding to strong employment data,” said Len Kiefer, deputy chief economist, Freddie Mac. “In May, the U.S. economy added 280,000 jobs. Moreover, job openings surged to 5.4 million in April, up over 20 percent from a year ago.”
The bond market selloff is starting to hinder the borrowing abilities of American consumers and companies, causing a mild economic tightening, reports Reuters. If this trend is sustained, it cold raise red flags at the Federal Reserve, increasing the possibility that the U.S. central bank could delay a plan to hike interest rates in coming months.
Even auto loans are becoming slightly more expensive, although these loans are bouncing from a record low in the fourth quarter of 2014.
Nonetheless, even corporations across the board have seen their borrowing costs jump as U.S. and European debt retrenched in recent weeks, Reuters says.
Here is Freddie Mac’s overview of rates for the week:
30-year fixed-rate mortgage (FRM) averaged 4.04 percent, with an average 0.6 point for the week ending June 11, 2015, up from last week when it averaged 3.87 percent. A year ago at this time, the 30-year FRM averaged 4.20 percent.
15-year FRM this week averaged 3.25 percent, with an average 0.6 point, up from last week when it averaged 3.08 percent. A year ago at this time, the 15-year FRM averaged 3.31 percent.
5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.01 percent this, week with an average 0.4 point, up from last week when it averaged 2.96 percent. A year ago, the 5-year ARM averaged 3.05 percent.
1-year Treasury-indexed ARM averaged 2.53 percent this week, with an average 0.2 point, down from last week when it averaged 2.59 percent. At this time last year, the 1-year ARM averaged 2.40 percent.