Mortgage Rates Spike, With 30-Year at 4.83%



Original Post Date: December 16, 2010

By: Mark Gongloff

Surging Treasury yields continue to drag mortgage rates higher, keeping pressure on the housing market.

The average rate on a 30-year, fixed-rate mortgage hit 4.83% in the week ending Thursday, the highest since May, according to Freddie Mac’s weekly survey of mortgage rates.

Rates have rebounded sharply in recent weeks from record lows in October. Yields on Treasurys have surged recently, and mortgage rates generally track those yields, which move inversely to Treasury prices.

The 10-year Treasury note, which most directly affects 30-year mortgage rates, rose early Thursday to 3.556%, its highest level since early May.

“Market concerns over stronger economic growth that, in the near term, could lead to an increase in inflation have sparked a rise in bond yields, and mortgage rates have followed,” said Freddie Chief Economist Frank Nothaft.

The jump in rates has likely snuffed out a refinancing boomlet that began this fall, when the 30-year mortgage rate was on its way to a record low of 4.17%, set in November. Higher rates have made it unattractive for millions of homeowners to refinance. It has also made home purchases less attractive.

Freddie Mac’s survey rates tend to lag moves in Treasurys. Other measures, such as those from data tracker HSH Associates, have rates already approaching 5%.

Thirty-year mortgage rates rose in the latest week from the prior week’s 4.61% average , but were down slightly from 4.94% a year ago. Rates on 15-year fixed-rate mortgages were 4.17%, up from 3.96% in the previous week but down from 4.38% a year earlier.

Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 3.77%, up from the prior week’s 3.60% but down from 4.37% a year earlier. One-year Treasury-indexed ARMs were 3.35%, up from 3.27% the prior week but down from 4.34% a year earlier.

To obtain the rates, the mortgages required payment of an average 0.7 point. A point is 1% of the mortgage amount, charged as prepaid interest.