With some encouragement from Federal Reserve Chairwoman Janet Yellen, long-term mortgage interest rates rose in the latest week, according to mortgage giant Freddie Mac, hitting a nine-week peak.
The average rate on a 30-year fixed rate mortgage jumped to 4.40 percent, excluding fees, during the week ended March 27, up from 4.32 percent the week before. Rates have not been this high since the middle of January. Last year at the same time, the average rate was only 3.57 percent.
“Mortgage rates rose following the uptick on the 10-year Treasury note after comments by the Federal Reserve Board Chair Janet Yellen indicated a possible increase in interest rates as soon as early 2015,” said Freddie Mac vice president and chief economist Frank Nothaft in a statement. “Also, the S&P/Case-Shiller 20-city composite house price index rose 13.2 percent over the 12-months ending in January 2014.”
The Fed has kept interest rates at rock bottom since the middle of the Great Recession and has even taken additional stimulus measures to push mortgage rates lower. Buying up roughly $75 billion in bonds each months for last year, the Fed has finally decided to taper those purchases to allow rates to lift a little. With even more positive data coming out of the housing market and general economy, it looks like the Fed is ready to move again. However, if mortgage rates rise too quickly it could put a damper on mortgage affordability and keep prices and sales from growing fast.
The 15-year fixed rate mortgage also rose 3.42 percent, up from 3.32 percent and up from 2.76 percent one year earlier. The one-year adjustable rate mortgage carried an average rate of 2.44 percent, down from 2.49 percent the week before and 2.62 percent during the same week of 2013.