Mortgage rates shot up in the last week following remarks from the Federal Reserve that it may be tapering its bond purchases later this year.
According to Freddie Mac’s Primary Mortgage Market Survey, the average 30-year fixed-rate mortgage (FRM) rose to 4.46% (0.8 point) for the week ending June 27, an increase from only 3.93% last week and the highest figure since the week of July 28, 2011. The weekly increase is the largest since April 1987. Last year at this time, the 30-year fixed averaged 3.66%.
The 15-year FRM this week averaged 3.50% (0.8 point), up from 3.04% the previous week. Adjustable rates also saw sizable increases, though they weren’t as dramatic. The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.08% (0.7 point), up from 2.79 percent. The 1-year ARM averaged 2.66% (0.5 point) compared to last week’s 2.57%.
“Following Fed chief Bernanke’s remarks on June 19th about the possible timing of reduced bond purchases, Treasury bond yields jumped over the week and mortgage rates followed. He indicated that the Fed may moderate the pace of its buying later this year and end the purchases around the middle of 2014,” said Frank Nothaft, VP and chief economist at Freddie Mac.
While the massive rate hike will certainly dampen some housing activity, Nothaft noted the effect “will be muted by the high level of buyer affordability, and home sales should remain strong.” Meanwhile, Bankrate.com’s weekly national survey showed the 30-year fixed rate rising to an average 4.61%. The 15-year fixed soared to 3.73%. The 5/1 ARM climbed up to 3.45%, the highest in more than two years.
“Mortgage rates posted the biggest one week increase since the 2008 failure of Lehman Brothers that pushed the global financial system to the brink. This week, the catalyst was something far more benign,” Bankrate said, referring to Bernanke’s announcement.
If you have been waiting to get off the sidelines, now is the time. Act before rates move higher before you get that dream home. Call us at 206-300-2693 or visit our website at http://www.jamesregroup.com to find out how we can help you find that right home.[contact-form-7 404 "Not Found"]