Are 30-year fixed-rate mortgages with interest rates beginning with a “3” soon to become something found only in the history books?
That was up from 3.91% last week and from a record low of 3.31% in November. As recently as early May, the typical rate was 3.35%
Not since Freddie Mac’s survey of April 5 last year, when the rate also was 3.98%, has the reading been so high. The 30-year rate fell below 4% for the first time in October 2011 and has remained mostly below that landmark ever since.
The typical 15-year fixed loan rate also was higher this week, rising from 3.03% last week to 3.1%. The shorter term loans have proved popular during the boom this past two years in borrowers refinancing their mortgages.
Borrowers would have paid 0.7% of the loan amount in fees to lenders to obtain the rates, according to the survey, which asks lenders about the terms they are offering to borrowers with solid credit.
The rates are rising in response to better economic news. That trend has investors thinking that the Federal Reserve may ease up on its massive bond-buying program, which has kept the rates in the basement.
The May unemployment report showed that the economy added 175,000 new jobs and the number of discouraged workers fell by 780,000, the fewest since September 2009, noted Freddie Mac’s chief economist, Frank Nothaft.
The rising rates have prompted greater numbers of borrowers to choose adjustable-rate loans, which have lower start rates, according to the Mortgage Bankers Assn.
But fixed-rate loans are still the most popular by far. And the higher rates, still a bargain by historical standards, are not considered a threat to the recent increase in home building.