The benchmark U.S. mortgage rate rose last week, after staying in a narrow range for the past several months, Freddie Mac reported.
The average rate on a 30-year fixed-rate mortgage increased to 7.19 percent compared with 7.09 percent a week earlier, according to a weekly survey of mortgage rates from Freddie Mac, an agency that is in the business of reselling home loans.
In mid-January, mortgage rates fell to 6.89 percent, the lowest level in more than four years. In the weeks before and after, the 30-year rate had fluctuated around 7 percent.
“The bond market sees the economy as strong with little chance of the Federal Reserve moving rates down; this leads room for interest rates to rise a little,” said Robert Van Order, the chief economist at Freddie Mac.
The report also showed that the average rate on an adjustable mortgage rose to 5.70 percent from 5.65 percent a week earlier. Fifteen-year mortgage rates, meanwhile, increased to 6.80 percent from 6.69 percent.
Low rates have kept the housing market strong. Last week the Commerce Department reported sales of new single-family homes rose 10.3 percent in January to an annual rate of 877,000, the largest monthly percentage gain in more than four years.
Industry figures also showed January home resales at a record level. For example, sales of previously owned homes rose to a record level in January. Home resales increased 0.7 percent, following a 0.5 percent decline in December, to an annual rate of 4.400 million, the National Association of Realtors said.
Low interest rates have also led to a surge in mortgage refinancings that will put as much as $6 billion in the pockets of U.S. consumers, assuming 30-year fixed mortgage rates stay close to 7 percent, according to the Mortgage Bankers Association of America. That’s more than the $5.5 billion in extra cash consumers got during the 1993 refinancing boom, said MBA economist Brian Carey.
The low average rate on 30-year fixed mortgages also sparked a record surge in mortgage applications during the week ended Jan. 16, according to the MBA. The MBA’s overall mortgage applications index declined 19.5 percent to 409.3 in the week ended Feb. 27, however.
The MBA’s indexes measure how many applications U.S. mortgage bankers receive each week, adjusted for seasonal changes and holidays.
Freddie Mac’s weekly survey measures the national average commitment rate for 80 percent loan-to-value mortgage loans during a one-week period. It doesn’t include points, the financing charges that consumers can pay initially to lower the annual interest rates on their mortgages.
