Mortgage Rates Top 7-Year High
May 17th, 2018 @ 1:33 PM by Amber Nelson
It looks like rising interest rates are in the forecast for the foreseeable future.
Interest rates on long-term U.S. mortgages pushed up to their highest level in 7 years this week, according to data from mortgage finance company Freddie Mac, following a major bond sell-off and speculation that the Federal Reserve might raise its own rate four more times this year.
The average rate on a conventional 30-year fixed rate mortgage (FRM) climbed to 4.61% with an average 0.4 point for the week ended May 17, 2018. That’s up from 4.55% last week and 4.02% a year ago. The last time the 30-year FRM was this high was back in May of 2011.
Other rates grew as well. The 15-year FRM averaged 4.08% with an average 0.4 point this week, up from 4.01% a week ago and 3.27% a year earlier. The 5-year adjustable rate mortgage (ARM) carried an average rate of 3.82% with an average 0.3 point, up from 3.77% the previous week and 3.13% the year before.
Healthy consumer spending and higher commodity prices spooked the bond markets and led to higher mortgage rates over the past week,” said Freddie Mac Chief Economist Sam Khater. “Not only are buyers facing higher borrowing costs, gas prices are currently at four-year highs just as we enter the important peak home sales season.”
He added, “While this year’s higher mortgage rates have not caused much of a ripple in the strong demand levels for buying a home seen in most markets, inflationary pressures and the prospect of rates approaching 5 percent could begin to hit the psyche of some prospective buyers.”
The higher rates have been affection refinance demand though. The Mortgage Bankers Association reported that its refinance index, a measure of total refinance loan application volume, fell 4% last week and refinance requests make up just 35.9% of all mortgage application activity, the lowest share in almost 10 years.
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.