Fixed mortgage rates shot higher for the fifth consecutive week, according to Freddie Mac, with the typical 15-year home loan topping 3% for the first time in a year and the 30-year rate rising to an average of 3.91% from 3.81% last week.
The trend reflects Wall Street's belief that the improving economy may cause a cut back on a bond-buying program that has kept long-term interest rates low, the government-backed mortgage finance giant said Thursday as it released its latest survey of what lenders are offering to solid borrowers.
The program, aimed at stimulating the economy, won't end until unemployment shrinks to 6.5% from 7.5% at last count. But it could scale back the bond purchases, which are steaming ahead at a clip of $85 billion a month.
A recent report showed economic activity increasing at a modest to moderate pace this spring in all its districts except Dallas, "which indicated strong economic growth," Freddie Mac chief economist Frank Nothaft said.
This week's average of 3.91% for a 30-year fixed mortgage contrasted with a 3.67% average rate a year earlier.
The 15-year fixed-rate mortgage averaged 3.03%, up from 2.98% last week and 2.94% a year ago. It was its first reading above 3% since the week of May 24, 2012.
