Mortgage rates surge to seven-year high in Freddie Mac survey

Galtero Lara
May 18, 2018

Long-term USA mortgage rates jumped this week, marking their highest levels in seven years amid the peak home buying season. Homes sold last month went into contract after a median of 36 days on the market, a record speed in data going back to 2010.

Sam Khater, Freddie Mac's chief economist, says the 30-year fixed mortgage rate edged up to 4.61 percent, which matches the highest level since May 19, 2011. The rise boosted the monthly payment on a $300,000, 30-year loan has climbed to $1,540 - up from $1,424 in the beginning of the year, Bloomberg noted.

"Healthy consumer spending and higher commodity prices spooked bond markets and led to higher mortgage rates over the past week", said Sam Khater, Freddie Mac's chief economist.

The benchmark 30-year rate pushed toward the significant 5 percent level.

A 15-year fixed rate mortgage averaged 4.08 percent this week, up from 4.01 percent last week.

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Despite higher borrowing costs and home prices, demand for home purchases has grown so far in the spring buying season, as the economic outlook has continued to improve and bolstered consumer confidence.

The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates.

Based on Freddie Mac's latest Primary Mortgage Market Survey, after plateauing in recent weeks, USA mortgage rates reversed course and reached a new high last seen eight years ago.

15-year FRM this week averaged 4.08 percent with an average 0.4 point, up from last week when it averaged 4.01 percent.

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.82 percent this week with an average 0.3 point, up from last week when it averaged 3.77 percent. The fee remained at 0.3 percent.

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