Mortgage rates reached new highs for the year as investors speculated on the timing of the Fed’s expected taper of its bond purchase program, Freddie Mac reported Thursday.
“Fixed mortgage rates continued to follow bond yields higher leading up to the August 21 release of the Federal Reserve monetary policy committee's minutes for July,” said Frank Nothaft, vice president and chief economist for Freddie Mac.“In its July 30 and 31 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.”
According to Freddie’s Primary Mortgage Market Survey, rates on the 30-year fixed-rate mortgage averaged 4.58% this week, up from 4.4% last week and 3.66% a year ago. The 15-year fixed-rate mortgage averaged 3.6%, up from 3.44% last week and 2.89% this time last year. The rate on the 5-year Treasury-indexed hybrid adjustable-rate mortgage dropped this week, averaging 3.21%, down from last week’s 3.23%. However, a year ago the 5-year ARM averaged 2.80%.
Nothaft said several participants of the Fed meeting felt the higher rates wouldn’t stall the housing recovery.
“Meeting participants acknowledged mortgage rate increases might restrain housing market activity, but several members expressed confidence the housing recovery would be resilient in the face of higher rates,” he said. “In fact, existing home sales increased in July to the strongest pace since November 2009 and homebuilder confidence in August rose to its highest reading since November 2005. Both increases occurred after mortgage rates had risen from their spring-time lows.”