Mortgage Interest Rates Top Yearly Highs
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UPDATED: May 30, 2013
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Mortgage interest rates are the highest in over a year, according to rate reports provided by loans.org.
All three rates increased for the fourth consecutive week. The mortgage interest rates have jumped from near historic lows to the highest yearly rates, all within the month of May.
For the week ending May 30, 2013, the 30-year fixed-rate mortgage (FRM) averaged 3.79 percent. Last week, loans.org reported the rate at 3.63 percent. At this time last year, Freddie Mac reported that the 30-year FRM averaged 3.75 percent.
In addition, loans.org reported that the 15-year fixed-rate mortgage averaged 2.94 percent. This rate jumped significantly from last week’s average of 2.75 percent.
The 5/1 adjustable-rate mortgage (ARM) averaged 2.44 percent, an increase from 2.35 percent set last week.
Freddie Mac attributed the recent growth in mortgage interest rates to higher yields of the long-term government bonds.
According to a growing market consensus, the Federal Reserve Bank of New York may reduce its accommodative policy stance. If the cost of borrowing is reduced, consumers will be encouraged to spend more in the general economy.
The S&P/Case-Shiller 20-city composite index increased significantly as well. It reported the highest seasonally adjusted rating since November 2008, with a monthly increase of 2.03 or 1.38 percent. All 20 cities used in the index reported positive monthly gains. The largest increase, 3.2 percent, was seen in Las Vegas.
Finally, the rates were impacted by an increase in consumer confidence. The Conference Board found that consumer confidence rose to the highest level since February 2008. It currently stands at 76.2. Conference Board experts report the rating likely increased because consumers viewed the current labor and business market conditions more positively and are more optimistic for the future economy.
Robin Shapiro, a real estate broker and owner of Robin Shapiro Realty, told loans.org that the increased mortgage rates are positive for the economy.
“While most would think this would hurt the market, it is in fact, an indicator of just how strong the economy is,” she said.
Shapiro said the improvement in the job market has caused more mortgage loan demand.
“The increased mortgage rates are also driving more people to act now, because they feel the economy is on the upswing and they want to lock in rates now before they rise even higher,” she said. “We expect sales to continue to improve as the summer heats up.”