US 30-year average mortgage rate rises to 4.08 per cent
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WASHINGTON — Long-term U.S. mortgage rates marked a fifth week of surges in the aftermath of Donald Trump's election win, reaching their highest levels this year.
Mortgage giant Freddie Mac said Thursday the average rate on a 30-year fixed rate loan rose to 4.08
The rate on 15-year home loans, a popular choice for people who are refinancing, jumped to 3.34
Long-term mortgage and interest rates have climbed in the four weeks since Trump's surprise victory on Nov. 9 to become the country's next president.
Bond investors are looking toward tax cuts and increased government spending to upgrade roads, bridges and airports under a Trump administration, which could fuel inflation. That would depress prices of long-term Treasury bonds because inflation would erode their value over time. When bond investors foresee rising inflation, they demand higher long-term yields and pay lower prices for bonds. Bond yields move opposite to prices and also influence long-term mortgage rates.
The yield on the 10-year Treasury bond stood at 2.38
More immediately, Federal Reserve policymakers are expected to raise the central bank's benchmark rate at their Dec. 13-14 meeting for the first time in nearly a year. Fed Chair Janet Yellen recently told Congress that the case for a rate boost has "continued to strengthen."
The effect of advancing mortgage rates could be seen in reduced activity by prospective homebuyers. Applications for mortgage loans fell 9.4
Higher mortgage rates, along with rising house prices, could eventually reduce demand for housing.
To calculate average mortgage rates, Freddie Mac 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
The average fee for a 30-year mortgage was unchanged this week at 0.5 point. The fee on 15-year loans also remained at 0.5 point.
Rates on adjustable five-year loans rose to 3.15