The recent Freddie Mac survey of lenders revealed higher mortgage rates this week, Los Angeles Times reports. The news site notes that the current average rate for a 30-year loan rose to 3.80 percent, a significant jump from 3.68 percent last week.
In addition, the survey of the mortgage finance company showed that the average rate for a 15-year loan already reached the 3 percent mark at 3.02 percent, higher than a weak earlier's 2.94 percent.
The initial rate on loans fixed for five years rose too, at 2.90 percent, up from 2.85 percent of last week's survey.
Len Kiefer, deputy chief economist with Freddie Mac, told LA times that there's "a sell-off in German bonds" which "helped drive U.S. Treasury yields up." He said that "mortgage rates tend to track the Treasury yield." Thus, this week's mortgage rates jumped along with the increase in Treasury yields.
The low mortgage rates were welcomed by buyers at the start of the spring selling season. The housing market seems hot and on the boom especially with news about the rise of pending home sales in March. The recorded pending home sales in the said month was 1.1 percent higher than February's sales, notes CNBC, citing the monthly index from the National Association of Realtors. CNBC adds that based on the NAR's report, the pending home sales posted a year-over-year gain of 11.1 percent, and at its highest level since June, 2013.
On Monday, Glenn Kelman, CEO of Redfin, an online real estate search and brokerage company, told CNBC that housing market is currently hot while the mortgage rates are low and that these sales may be affected once the rates rise.
"We do not see consumers willing to pay that price when rates go up. We think there is going to be a step back as the money supply tightens," Kelman said in an interview with CNBC's "Power Lunch."
The Redfin CEO explained that during the latter part of 2013, there was an increase in the mortgage rates and demands from buyers dropped within 10 to 20 percent. Kelman explained, "When rates go up precipitously, when the market has a bit of a spike, that's when you really see that pullback. We don't see people saying 'well, I'll pay whatever it takes.' We see people saying, 'while rates are low I'm going to pay this price.'"
Although this is the first time after six weeks that mortgage rates posted a higher than 3.7 percent rate, these are still near historic lows, since rates for the 30-year fixed loan were about 8 percent two decades ago and 13 percent three decades ago, LA Times previously reported. The news outlet also informed that last year, around this time, the average rate for the longer term of 30 years was at 4.29 percent.
