Rates on 30-year home loans rise to 5.21 pct
Rates jump to highest level in 8 months as bond yields rise
Rates for 30-year home loans surged, rising to the highest level in eight months due to the improving economy and the end of a government push to keep rates low. The average rate on a 30-year fixed rate mortgage was 5.21 percent this week, up from 5.08 percent a week earlier. That's the highest since mid-August, when the average rate was 5.29 percent.
Rates had dropped to a record low of 4.71 percent in December, pushed down by a campaign by the Federal Reserve to reduce borrowing costs for consumers. The program ended last week, but the Fed left the door open to reviving the program if the economy weakens.
Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day, often tracking the interest rate paid on long-term Treasury bonds.
Treasury yields have climbed steadily in recent weeks because of weak demand. The government has had to offer a better interest rate to sell its bonds as investors shift toward stocks and riskier corporate debt.
The 10-year yield rose above 4 percent on Monday for the first time since June, but fell back to 3.85 percent on Thursday.
This week, the average rate on a 15-year fixed-rate mortgage was 4.52 percent, up from 4.39 percent last week. Rates on five-year, adjustable-rate mortgages averaged 4.25 percent, up from 4.1 percent a week earlier. The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount. The nationwide fee for loans in Freddie Mac's survey averaged 0.6 of a point for 30-year, 15-year and 5-year loans.
All of this is happening while the Westside of Los Angeles is experiencing some very strong fundamentals including lower inventory, higher prices, many cases of multiple offers, and for the fifth straight month, a greater number of escrows being opened than the number of new listings to come to market. Sign of a turnaround? From what we are seeing here, there is sufficient evidence that this could very well be the case.
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Elizabeth and Jim Stein
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