Investors' bond sales lead to higher mortgage rates

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Mortgage rates jumped across the board as investors sold some of their Treasury bond holdings, which led to higher yields, according to Freddie Mac.

30-Year FRM 15-Year ARM 5/1-Year ARM
Average Rates 3.99% 3.44% 3.46%
Fees & Points 0.5 0.5 0.4
Margin N/A N/A 2.75

The 30-year fixed-rate mortgage averaged 3.99% for the week ending January 11, 2018, up from last week when it averaged 3.95%. Except for the week of Dec. 28, this is the highest the rate has been since July 13.

A year ago at this time, the 30-year fixed-rate mortgage averaged 4.12%.

"After dipping slightly last week, Treasury yields surged this week amidst sell-offs in the bond market. The 10-year Treasury yield, for instance, reached its highest point since March of last year. Mortgage rates followed Treasury yields and ticked up modestly across the board," Len Kiefer, Freddie Mac's deputy chief economist, said in a press release.

The 15-year fixed-rate mortgage this week averaged 3.44%, up from last week when it averaged 3.38%. A year ago at this time, the 15-year fixed-rate mortgage averaged 3.37%.

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.46% this week with an average 0.4 point, up from last week when it averaged 3.45%. A year ago at this time, the five-year adjustable-rate mortgage averaged 3.23%.

"Mortgage rates moved decisively higher this week as markets returned from the holiday season with vengeance, touching their highest levels since July," Aaron Terrazas, Zillow's senior economist, said when that company released its own rate tracker on Wednesday.

"Mortgage rates are still lower than they were a year ago, but the momentum is clearly on an upward trend, as markets grapple with a growing consensus that the American economy is at full capacity, softer international demand for U.S. debt, and larger fiscal deficits on the horizon. Inflation and consumer spending data due this week could reinforce the narrative of a strong U.S. economy, particularly if December retail sales are in line with or above expectations," Terrazas said.

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