Average US 30-year mortgage rate rises to year-high 4.21 pct

Fed Chair Janet Yellen has signalled that the central bank likely will decide at its policymakers’ meeting next week to resume raising its key interest rate, reflecting a strengthening job market and inflation edging toward the Fed’s 2 per cent target. Yellen also recently said that the Fed expects steady economic improvement to justify additional rate increases.

Investors’ views of expanding economic growth and rising inflation drove prices of long-term Treasury bonds lower over the past week. That pushed up their yields because inflation would erode the bonds’ value over time, a prospect causing investors to demand higher yields.

Bond yields move opposite to prices and influence long-term mortgage rates. The yield on the 10-year Treasury note jumped to 2.56 per cent Wednesday from 2.46 per cent a week earlier. It rose further to 2.58 per cent Thursday morning.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 per cent of the loan amount.

The average fee for a 30-year mortgage was unchanged this week at 0.5 point. The fee on 15-year loans also remained at 0.5 point.

Rates on adjustable five-year loans rose to 3.23 per cent from 3.14 per cent last week. The fee held at 0.4 point.

The Associated Press

by Canadian Press

Average US 30-year mortgage rate rises to year-high 4.21 pct

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