Fixed Rates Soar to Highest Level in a Year

rising-arrows-twoEncouraging economic data helped lift fixed mortgage rates to their highest level in the past year this week, according to surveys from Freddie Mac and Bankrate.com.

Freddie Mac’s Primary Mortgage Market Survey showed the 30-year fixed rate rising to an average 3.81 percent (0.8 point) for the week ending May 30, up from last week’s 3.59 percent. Since the beginning of May, the 30-year fixed average has jumped up nearly half a percentage point.

The 15-year fixed-rate mortgage (FRM) also soared this week, rising to 2.98 percent (0.7 point) from last week’s 2.77 percent.

Adjustable rate movements were mixed. The 5-year hybrid adjustable-rate mortgage (ARM) averaged 2.66 percent (0.5 point) this week, up from last week’s average of 2.63 percent. The 1-year ARM averaged 2.54 percent (0.5 point), a slight drop from 2.55 percent in the last survey.

“Fixed mortgage rates followed long-term government bond yields higher following a growing market sentiment that the Federal Reserve may lessen its accommodative policy stance,” said Frank Nothaft, VP and chief economist at Freddie Mac.

“Improving economic data may have encouraged those views,” he added, referencing the week’s reports of increased consumer confidence and strong home price gains.

Bankrate’s weekly national survey saw the 30-year benchmark rate rising to 3.99 percent, an increase of 25 basis points week-over-week. The 15-year fixed was up to 3.21 percent.

Meanwhile, the 5/1 ARM rose more than a tenth of a percentage point to 2.81 percent.

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