Freddie Mac released its weekly update on national mortgage rates this morning, showing fixed mortgage rates rising sharply apparently in response to continued worries over a coming halt to Fed bond buying.
Thirty-year fixed rate mortgages (FRM) climbed 18 basis points from last week's tally, landing at 4.58%. Fifteen-year FRMs rose 16 b.p. to hit 3.60%. Both averages are the highest since July 2011. Rates have risen more than a full percentage point since May.
Despite the increase, mortgage rates remain low by historical standards. And recent reports suggest the jump in rates has yet to sap the housing recovery's momentum.
Adjustable rate mortgages (ARMs) were mostly unchanged in the most recent week. 5/1 ARMs dropped two basis points to 3.21%; one-year ARMs held steady at 2.67%.
Commenting on the numbers, Freddie Mac Vice President and Chief Economist Frank Nothaft noted that "fixed mortgage rates continued to follow bond yields higher leading up to the August 21st release of the Federal Reserve monetary policy committee's minutes for July. In its July 30th and 31st meetings, the committee members were broadly comfortable with a plan to start reducing its bond purchases later this year, although a few emphasized the importance of being patient."
Because "reducing bond purchases" is tantamount to reducing demand for them, it has the effect of reducing competition for loans, and raising the prices lenders can charge, which leads to rising mortgage rates.
-- Material from The Associated Press was used in this report.