Mortgage rates rose for a second week, extending an increase in borrowing costs from an eight-month low.
The average rate for a 30-year fixed mortgage was 4.2% this week, up from 4.14%, Freddie Mac said in a statement today. The average 15-year rate climbed to 3.31% from 3.23%, according to the McLean, Va.-based mortgage-finance company.
Homebuyers got a temporary reprieve when rates unexpectedly dropped for five straight weeks beginning in early May. Economists expect loan costs to climb in the second half of the year as the Federal Reserve continues scaling back bond purchases that have helped support housing demand. Policy makers next meet on June 17-18.
"Mortgage rates have confounded expectations by falling in the face of a strengthening economy this spring," Keith Gumbinger, vice president of HSH.com, a Riverdale, N.J.-based mortgage-data firm, said yesterday in a telephone interview. "But now it would seem that interest rates are behaving a little more normally."
Lower rates spurred an increase in loan applications, data from the Mortgage Bankers Association showed yesterday. In the week through June 6, the group’s purchase index rose 9.3%, the biggest gain since late February, and the refinancing measure increased 11%.
The average rate for a 30-year fixed mortgage reached a high of 4.58% in August. A year ago, it was 3.98%.