Mortgage rates rose this week, with a widely watched survey reporting that lenders were offering 30-year fixed-rate loans at an average of 3.51%, up from a near-record low of 3.35% two weeks ago.
The survey, released Thursday by mortgage financier Freddie Mac, show rates following U.S. Treasury bond yields higher on signs of a stronger economy.
The yield on the benchmark 10-year Treasury note has risen about a quarter of a percentage point over the last two weeks as investors optimistic about the economy have poured money into stocks and out of bonds.
Sales of goods to consumers at retail outlets rose slightly in April, when most analysts had expected a slight decline, and household debt and serious mortgage delinquencies are falling, noted Freddie Mac chief economist Frank Nothaft.
The rate for a 15-year fixed home loan, popular with people refinancing their mortgages, averaged 2.69% this week, Freddie Mac said, compared with a record low of 2.56% two weeks earlier.
The decline of 30-year mortgage rates to less than 4% last year stoked a boom in mortgage refinancing that now is slowly giving way to more loans used to finance purchases.
The percentage of closed home loans used for purchases rather than refinances hit 42% in April, up from just 27% in January, according to a study this week by mortgage management software provider Ellie Mae.
A hot market for housing, including deep-pocketed investors making all-cash deals, has resulted in “a stampede of buyers for every well-priced home,” said mortgage broker Jeff Lazerson in Laguna Niguel.
“It’s just awful for low-down-payment buyers. They can’t get their offers accepted and they just keep chasing the prices higher and higher every day,” said Lazerson, head of the Mortgage Grader brokerage.
Freddie Mac’s survey asks lenders each Monday through Wednesday what terms they are offering to solid borrowers who pay less than 1% of the loan amount in upfront lender fees and discount points.
Actual rates fluctuate constantly, and borrowers can pay more upfront to lenders in order to bring down their rates.