Following seven months of decline, mortgage rates are creeping up again.
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Both 15- and 30-year fixed mortgage rates rose for the fifth straight week, according to Freddie Mac's mortgage market survey for the week ending Dec. 16.
The average 30-year fixed mortgage rate was 4.83 percent with an average 0.7 point, up from the previous week's average of 4.61 percent, but still lower from one year ago when rates averaged 4.94 percent.
The average rate on a 15-year fixed mortgage was 4.17 percent with an average 0.7 point, up from the previous week when it averaged 3.96 percent, but down from one year ago when it averaged 4.38 percent.
Rates for adjustable mortgages were up, too. The average rate for 5-year Treasury-indexed hybrid adjustable-rate mortgages was 3.77 percent with an average 0.7 point, up from the previous week's average of 3.6 percent. A year ago, the 5-year adjustable-rate mortgage averaged 4.37 percent.
Rates for one-year Treasury-indexed adjustable-rate mortgages averaged 3.35 percent with an average 0.7 point, up from the previous week's average of 3.27 percent. A year ago, the 1-year adjustable-rate mortgage average 4.34 percent.
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Why are current mortgage rates higher?
Freddie Mac Vice President and Chief Economist Frank Nothaft attributed the rise in current mortgage rates to concerns that stronger economic growth could lead to higher inflation. Those concerns sparked an increase in bond yields, with mortgage rates following.
"For instance, the growth in retail sales, excluding automobiles, in November was twice that of the market consensus forecast. Industrial production showed the biggest gain in November since July, according to the Federal Reserve Board. And consumer sentiment, as measured by the Thomson Reuters/University of Michigan index, rose to a six-month high in December," he said in a press statement. "As a result, interest rates for 30-year fixed mortgage this week were the highest since the week of May 20."
Rising mortgage rates could spur first-time homebuyers and refinancers to act before the rates climb any higher, or they could dampen an already cool housing market. Applications for mortgage refinancing fell for the fifth straight week, according to the Mortgage Bankers Association's mortgage applications survey for the week ending Dec. 10. Applications for home purchases dropped, following three weeks of increases.
Refinancers continue to dominate the mortgage market. More than three quarters of mortgage applications (76.7 percent) are for refinancing, according to the Mortgage Bankers Association.
The original article can be found at MoneyRates.com:
Mortgage rates climb