Mortgage rates this week resumed upward trend, Freddie Mac says

Fixed mortgage rates this week resumed their recent upward trend, with lenders offering 30-year home loans to solid borrowers at an average of 4.51%, according to Freddie Mac.

The average rate, up from 4.29% last week and 3.56% a year ago, is more than a percentage point above last fall’s record low of 3.31%.

Rising rates could send more prospective buyers into the housing market in the short term while also making it harder to afford a home. Rising rates also are likely to cut into mortgage refinancing activity.

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The average rate on 15-year fixed-rate loans rose to 3.53% this week from 3.39%. A year ago, the 15-year average rate was 2.86%. The record low for the 15-year mortgage, which has been popular with refinancers, is 2.56%, set in early May, Freddie Mac said.

Mortgage rates are still affordable by historical standards. Their sharp ascent in recent weeks reflects speculation that the Federal Reserve will reduce its $85 billion in monthly purchases of Treasury bonds and mortgage-backed securities. That stimulus program has kept long-term interest rates low.

Strong employment gains in June led more investors to conclude that the Fed would pull back on its bond purchases.

But the minutes of the last meeting of the central bank’s monetary policy committee, released Wednesday, indicated that many Fed members would like to see more improvement in the job market before trimming the volume of bond buying.

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