WASHINGTON – Mortgage rates moved higher this week, a trend that is slowing home-mortgage refinancings but isn't expected to do much to hurt home sales, economists said.
Rates on benchmark 30-year, fixed-rate mortgages climbed to 6.30 percent for the week ending June 11, up from 6.28 percent last week, Freddie Mac (search), the mortgage giant, reported Thursday in its weekly nationwide survey of rates.
Thirty-year mortgage rates hit a low this year of 5.38 percent during the week ending March 18. Since then, they have slowly moved upward.
Rates for 15-year, fixed-rate mortgages rose this week to 5.67 percent, up from 5.63 percent last week. Rates for one-year adjustable rate mortgages increased to 4.14 percent this week, a big jump compared with last week's average rate of 3.98 percent.
The recent rise in mortgage rates comes in anticipation that the Federal Reserve (search) will raise a key short-term interest rate for the first time in four years on June 30.
"All eyes will be on the Fed for the next few months at least. How aggressive or how measured the coming rates hikes are will determine the future direction of both short- and long-term mortgage rates," said Frank Nothaft, Freddie Mac's chief economist.
David Lereah, chief economist at the National Association of Realtors (search), is now predicting that 30-year mortgage rates will rise to 6.9 percent by the final quarter of this year, which would still be considered low by historical standards.
Lereah is forecasting sales of previously owned homes to set a new record this year and sales of new homes to finish close to a record high. An improved labor market should support demand for homes, he said.
This time a year ago, rates on 30-year mortgages averaged 5.21 percent, rates for 15-year mortgages stood at 4.60 percent and rates on one-year ARMs averaged 3.54 percent.
The nationwide averages for mortgage rates do not include add-on fees known as points. Each loan type carried an average fee of 0.7 point this week.
The recent rise in mortgages is slowing refinancing activity. Refinancings accounted for just 32.6 percent of total mortgage loan applications filed last week, down from 34.3 percent in the previous week, the Mortgage Bankers Association (search) said.
The Federal Reserve also reported Thursday that debt of American households grew at a 10.9 percent annual rate in the first quarter of this year, up from a 7.3 percent pace in the previous quarter. A pickup in mortgage borrowing and consumer credit was largely behind the first-quarter rise, the Fed said.
Home mortgage debt grew at a 12.5 percent rate in the first quarter, up from a 9.5 percent growth rate in the previous quarter.