NEW YORK – Rates on fixed mortgages jumped from their lowest levels in decades this week.
Mortgage buyer Freddie Mac said Thursday the average rate for 30-year fixed loans rose to 4.39 percent from 4.17 percent, the lowest level on records dating back to 1971. The 15-year loan also climbed to 3.76 percent from 3.57 percent, the lowest since that survey began in 1991.
Rates rose because Treasury yields climbed to their highest level since July. Mortgage rates tend to track those yields.
The yields rose mostly because traders dumped Treasurys they bought up before the Federal Reserve announced its $600 billion bond-buying program to spur the economy. Republican economists and lawmakers have criticized the Fed program, saying it could lead to runaway inflation. Those fears have led investors to sell their bonds.
Before last week, mortgage rates had been at or near historic lows since April as investors, worried about the economy, shifted money into the safety of U.S. Treasurys. Mortgage rates fell to their lowest point as traders snatched up Treasurys ahead of the central bank's announcement.
The recent jump in rates rippled through the mortgage market. The number of people filling out mortgage applications slumped last week, the Mortgage Bankers Association said Wednesday. Purchase applications dropped by 5 percent from the previous week, while refinance applications tumbled 16.5 percent.
While refinancing activity got a boost, low rates did little to buoy the struggling housing market. Potential buyers are worried about their jobs or unable to qualify for a loan because of tighter credit standards. Others can't sell their own homes before buying another.
To calculate average mortgage rates, Freddie Mac collects rates from lenders across the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a single day.
Rates on five-year adjustable-rate mortgages averaged 3.40 percent, up from 3.25 percent, the lowest rate on records dating back to January 2005.
Rates on one-year adjustable-rate home loans were unchanged at 3.26 percent.
The rates do not include add-on fees, known as points. One point is equal to 1 percent of the total loan amount.
The average fee for 30-year mortgage in Freddie Mac's survey was 0.9 point. It was 0.7 point for 15-year fixed loans and five-year mortgages. It was 0.6 point for 1-year mortgages.