A strong economy and a much-awaited increase in unsold housing inventory caused average mortgage rates to climb, escalating for the third time in the nine weeks since Memorial Day, according to Freddie Mac.

30-Year FRM

15-Year FRM

5/1-Year ARM

Average Rates

4.54%

4.02%

3.87%

Fees & Points

0.5

0.4

0.4

Margin

N/A

N/A

2.76

"The next few months will be key for gauging the health of the housing market," said Freddie Mac Chief Economist Sam Khater. "Existing sales appear to have peaked, sales of newly built homes are slowing and unsold inventory is rising for the first time in three years."

"Meanwhile, affordability pressures are increasingly a concern in many markets, as the combination of continuous price gains and higher mortgage rates appear to be giving more prospective buyers a pause. This is why new- and existing-home sales are not breaking out this summer despite the healthy economy and labor market," Khater added.

The 30-year fixed-rate mortgage averaged 4.54% for the week ending July 26, up 2 basis points from last week. At this time a year ago, the 30-year fixed-rate mortgage averaged 3.92%.

Mortgage rates rise

Yields on the 10-year Treasury note, a key indicator in pricing 30-year fixed-rate mortgages, went up by 10 basis points since last week.

The 15-year fixed-rate mortgage also rose 2 basis points this week and averaged 4.02%. A year ago at this time, the 15-year fixed-rate mortgage averaged 3.2%.

The average five-year Treasury-indexed hybrid adjustable-rate mortgage stayed static at 3.87%. The five-year adjustable-rate mortgage averaged 3.18% at this time last year.

"Mortgage rates increased early this week, erasing the past month of gradual declines. Although they remain below the recent highs touched in early May, they are up nearly 100 basis points over the past year," Aaron Terrazas, Zillow's senior economist, said when that company released its own rate tracker on July 26.

"The combination of a new round of trade tensions between the U.S. and China, comments from several Federal Reserve officials and the shifting monetary policy outlook in Japan all contributed to the trend. Second-quarter gross domestic product data due Friday are the most important economic data to watch, as markets aren't expecting any changes to the interest rate policy from the Federal Open Market Committee's meeting next week."

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