Mortgage Rates Spike Sharply
Freddie Mac released its weekly update on national mortgage rates this morning, showing a continued rise in interest rates -- nearly across the board. While still historically low, fixed mortgage rates are the highest they've been in a year.
Thirty-year fixed-rate mortgages (FRM) and 15-year FRMs both spiked sharply higher on the week, up 22 and 21 basis points, to 3.81% and 2.98%, respectively.
Increases in variable-rate mortgages were more modest, with 5/1 adjustable rate mortgages rising just three basis points to 2.66%, and one-year ARMs declining a single basis point to 2.54%.
Commenting on the spike in rates, Freddie Mac Vice President and Chief Economist Frank Nothaft said "fixed mortgage rates followed long-term government bond yields higher following a growing market sentiment that the Federal Reserve may lessen its accommodative policy stance. Improving economic data may have encouraged those views."
Nothaft pointed out that consumer confidence in May hit its highest level since February 2008. This reflects an increasing willingness, and ability, for consumers to spend on, among other things, pricier mortgages.
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