Fixed mortgage rates in the United States went up for the second consecutive week after the country posted good job data and better treasury yields, Freddie Mac - the government backed lending giant - announced Thursday.
According to the report, 30-year fixed mortgage rates ticked up to 4.20 percent from last week's 4.14 percent. The average 15-year fixed interest rates were also up 3.31 percent from last week's 3.23 percent.
The five-year adjustable mortgage rate averaged 3.05 percent from last week's 2.93 percent. The average one-year treasury-indexed adjustable mortgage rate remained unchanged at 2.40 percent.
"Mortgage rates continued to climb for the second week in a row following the increase in 10-year Treasury yields. Also, the economy added 217,000 jobs in May, following a 282,000 surge in April and a 203,000 increase in March. Meanwhile, the unemployment rate in May held steady at 6.3 percent," said Frank Nothaft, chief economist and vice president at Freddie Mac, in a statement.
Mortgage rates spiked for a second week after witnessing continuous declines for six weeks. This is a positive sign for the housing market. Late in May, the U.S. commerce department revealed that home sales in the country had gone up 6.4 percent, the biggest gain in the last six months.
"The deep freeze is over, and I think we can expect new home sales to continue to rise," David Berson, chief economist at Nationwide Insurance, told Bloomberg.
The rise in mortgage rates and home sales reflects a real estate market which is still recovering. However, a recent report released by the International Monetary Fund revealed that home prices are gaining traction in most of the countries around the world including the U.S. The increase could lead to another real estate bubble.
"While a recovery in the housing market is surely a welcome development, we need to guard against another unsustainable boom," Min Zhu, deputy managing director at the IMF, wrote in a post.
"Our research indicates that boom-bust patterns in house prices preceded more than two-thirds of the recent 50 systemic banking crises."
The IMF noted that while home prices in the U.S. went up 5 percent in 2013, the economy grew only half of that much.
