WASHINGTON (AP) — Average U.S. rates on fixed mortgages rose this week as the spring home-buying season has gotten off to a slow start.
Mortgage buyer Freddie Mac said Thursday that the average rate for the 30-year loan rose to 4.33 percent from 4.27 percent last week. The average for the 15-year mortgage increased to 3.39 percent from 3.33 percent.
Mortgage rates have risen almost a full percentage point since hitting record lows about a year ago.
Warmer weather has yet to boost home-buying as it normally does. Rising prices and higher rates have made affordability a problem for would-be buyers, while many homeowners are reluctant to list their properties for sale. Roughly a third of homeowners owe more on their mortgage than they could recoup from a sale.
Sales of new homes fell 14.5 percent in March to a seasonally adjusted annual rate of 384,000, the Commerce Department said Wednesday. Purchases of existing homes slightly declined last month, the National Association of Realtors said Tuesday.
Mortgage applications last week tumbled 3.3 percent from the prior week’s level, the Mortgage Bankers Association said Wednesday.
Average prices nationally are expected to rise by single digits this year, after a double digit surge last year as home values rebounded from the Great Recession.
The increase in mortgage rates over the year was driven by speculation that the Federal Reserve would reduce its $85 billion-a-month bond purchases, which have helped keep long-term interest rates low. Indeed, the Fed has announced three $10 billion declines in its monthly bond purchases since December. The latest plan is to cut its monthly long-term bond purchases to $55 billion because the Fed thinks the economy is steadily healing.
Fed officials meet next week to decide whether the purchases should be further reduced. However, the central bank expects its benchmark short-term rate to stay unusually low
To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fee for a 30-year mortgage fell to 0.6 point from 0.7 point a week ago. The fee for a 15-year loan remained at 0.6 point.
The average rate on a one-year adjustable-rate mortgage stayed at 2.44 percent for the second straight week. The average fee held steady at 0.5 point.
The average rate on a five-year adjustable mortgage remained at 3.03 percent for the past two weeks. The fee was unchanged at 0.5 point.