Mortgage rates reach highest level in 2 years

Written By limadu on Kamis, 11 Juli 2013 | 21.29

NEW YORK (CNNMoney)

After a slight pause, Freddie Mac said rates climbed 0.22 percentage point to 4.51% for a 30-year, fixed-rate loan. The rate is the highest it has been since the week of July 28, 2011.

The rate for a 15-year mortgage hit 3.53%, up 0.14 percentage point.

Related: Best advice now for homebuyers and sellers

Analysts blamed a 0.53 percentage point spike two weeks ago on the actions of the Federal Reserve. Rates began to run up following hints by chairman Ben Bernanke that the Fed would soon start tapering off on its purchases of up to $85 billion a month in bonds and mortgage-backed securities, a program designed to keep borrowing costs low.

This time, the rate rise culprit is the economy, according to Keith Gumbinger, vice president of HSH.com, a mortgage information company.

"Strengthening employment data put the bond and mortgage markets on the defensive again," he said. "The employment report for June, released last Friday, was firmer than expected, and upward revisions to April and May figures showed that hiring is on stronger footing than was previously believed."

Related: Quiz: How much do you know about mortgages?

The rate increases signal trouble for house hunters, according to a survey by Trulia, the Web-based real estate company. It found that 41% of consumers sampled called the increases their number one worry, even ahead of price increases.

Related: Scary times hit mortgage shoppers

So far, however, the biggest impact on the mortgage market has been to discourage existing homeowners from refinancing their loans.

The refinance share of mortgage applications dropped to 64% this week, according to the Mortgage Bankers Association. It had often been running at 75% or more of the market until rates started to move up. To top of page

First Published: July 11, 2013: 10:02 AM ET


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