Mortgage rates for 30-year loans rose to a two-month high, increasing borrowing costs for homebuyers as the market’s recovery showed signs of weakening.
The average rate for a 30-year fixed mortgage was 4.4% this week, up from 4.32%, Freddie Mac said today in a statement. The average 15-year rate climbed to 3.42% from 3.32%, according to the McLean, Va.-based mortgage-finance company.
Housing demand has cooled as higher prices and mortgage rates cut into affordability and harsh weather in many parts of the U.S. kept would-be buyers away. New-home purchases dropped in February to the lowest level in five months, Commerce Department data showed this week. Sales of existing houses fell last month to a 4.6 million annual rate, the fewest since July 2012, according to the National Association of Realtors.
“The housing numbers have been really disappointing,” Patrick Newport, an economist with IHS Global Insight in Lexington, Mass., said in a telephone interview yesterday. “Most people were expecting stronger pickup in housing this year that would lift the economy into a stronger growth pattern, and that isn’t happening.”
Contracts to buy previously owned homes fell for an eighth straight month in February, the Realtors group said today.
Price gains have slowed, according to the S&P/Case-Shiller index of 20 cities. In the year through January, the measure increased 13.2%, compared with 13.4% in the 12 months through December.
Mortgage rates are poised to climb as the Federal Reserve continues tapering stimulus efforts that have kept borrowing costs low. Policy makers cut monthly bond purchases to $55 billion last week, from $85 billion last year. Fed Chair Janet Yellen said the program could end this fall and that the benchmark interest rate, which has been close to zero since 2008, may rise six months after that.
The average 30-year mortgage rate was 3.57% a year earlier, according to Freddie Mac.