Mortgage rates rose to a 2015 high this week as bond investors reacted to reports showing the housing market is heating up.
The average rate for a 30-year fixed mortgage was 3.87%,
Home-loan costs climbed as investors speculated that positive economic data will encourage the Federal Reserve to increase the amount it charges banks to borrow funds. In her first public comments on monetary policy since late March, Fed Chair Janet Yellen said last week that if the economy continues to improve as she expects, "it will be appropriate at some point this year" to start raising rates.
Signed contracts to buy previously owned homes rose to a nine-year high in April, the National Association of Realtors reported Thursday. The increase was led by gains in the Northeast and Midwest regions, the trade group said.
Earlier this week, data showed home prices and sales of new houses rose at a faster pace than economists expected. Other reports showed U.S. business investment could pick up in the second half of the year, and consumer confidence improved.
The average rate for a 30-year fixed mortgage probably will reach 4.4% by the fourth quarter, according to the Mortgage Bankers Association. It probably won't break 5% until mid-2016, the trade group said in a forecast. For the year, home lending may total $1.3 trillion, up 14% from 2014, as the economy spurs gains in home sales and prices, the group said.
