30-year mortgage rate rises to 4.48%

Friday, December 27, 2013

WASHINGTON - Average U.S. rates for fixed mortgages crept higher this week but remained low by historical standards.

Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan increased to 4.48 percent from 4.47 percent last week. The average on the 15-year fixed loan rose to 3.52 percent from 3.51 percent.

Mortgage rates peaked at 4.6 percent in August on expectations that the Federal Reserve would reduce its $85 billion-a-month in bond purchases. Those purchases push mortgage and other long-term rates lower and encourage borrowing and spending. On Dec. 18, the Fed decided the economy was strong enough to allow it to reduce the monthly purchases by $10 billion.

Mortgage rates are higher than they were a year ago when the 30-year fixed rate was 3.35 percent and the 15-year rate was 2.65 percent.

The Commerce Department reported Tuesday that new-home sales dipped 2.1 percent in November to a seasonally adjusted 464,000. But stronger figures for the previous three months suggested that housing may be regaining strength after a summer lull.

“Slightly higher rates are unlikely to be enough to derail the housing-market recovery as improvement in labor markets and other economic fundamentals keeps the recovery on track,” said Gennadiy Goldberg, U.S. strategist for TD Securities in New York.

Higher rates have reduced demand for refinancing. A measure of applications to cut monthly payments fell 7.7 in the period ended Dec. 20 from the prior week, according to the Mortgage Bankers Association. The index hit its lowest level since 2008 and is down 72 percent from the week ended May 3. The Washington-based group’s purchase measure dropped 3.5 percent last week and is down 24 percent from May 3.

The National Association of Realtors said last week that the number of people who bought previously owned homes in November fell for a third-straight month. Higher rates and the lingering effects of the partial government shutdown in October may have deterred some sales.

Still, the government said builders broke ground on homes at a seasonally adjusted annual rate of 1.09 million homes and apartments in November. That was the fastest pace since February 2008 and was 23 percent higher than in October.

To calculate average mortgage rates, Freddie Mac, the Federal Home Loan Mortgage Corp., 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 was 0.7 point. The fee for a 15-year loan was 0.7 point.

The average rate on a one year adjustable-rate mortgage slipped to 2.56 percent from 2.57 percent last week. The fee was 0.5 point.

The average rate on a five-year adjustable mortgage rose to 3 percent from 2.96 percent. The fee was 0.4 point.

Information for this article was contributed by The Associated Press and by John Gittelsohn of Bloomberg News.

Business, Pages 23 on 12/27/2013