Mortgage rates in the U.S. rose to their highest since May 1, 2014 this week after holding steady at record lows in the past few weeks, the latest results of Freddie Mac's Primary Mortgage Market Survey revealed.
The average 30-year-fixed mortgage rates spiked to 4.23 percent from last week's 4.12 percent. The rate was 4.50 percent at the same time, last year.
The average 15-year-fixed mortgage rates went up to 3.37 percent from last week's 3.26 percent. It averaged 3.54 percent at the same time, last year.
The five-year treasury-indexed hybrid adjustable mortgage rate went up to 3.06 percent from last week's 2.99 percent. The rate was 3.11 percent a year ago.
The average one-year treasury-indexed adjustable mortgage rate was the only rate that went down to 2.43 percent from last week's 2.45 percent. The rates averaged 2.65 percent at the same time last year.
Experts at Freddie Mac attribute the rise in mortgage rates to the increased yield on the 10-year treasury notes that went up on market speculation of the Federal Reserve changing its interest rates guidance.
"Fixed-rate mortgage rates rose this week following the increase in 10-year Treasury yields being partially fueled by market speculation the Federal Reserve might change its interest rate guidance. Meanwhile, the Labor Department reported that its Consumer Price Index (CPI) declined 0.2 percent in August reflecting declines in energy prices. Excluding food and energy, the CPI was unchanged," Frank Nothaft, chief economist at Freddie Mac, explained.
Other industry experts believe that the spike is temporary and hope to see mortgage rates stabilizing in the coming few weeks.
"Weekly initial jobless claims report may have some impact on the rates. But overall with seven consecutive days of rate increase, I see the rates stabilizing this week," Shashank Shekhar, CEO of Arcus Lending Inc., told Realtor.com.
Not only did mortgage rates see a spike, but applications for purchase and refinancing activity also rose, according to the Mortgage Banking Association's latest weekly report.
The MBA's market Composite Index, a measure that gauges mortgage activity and application volume across the country, was up 7.9 percent on a week-over-week basis.
While the refinancing applications index spiked 10.3 percent, the purchase activity index grew 4.8 percent.
"Application volume rebounded coming out of the Labor Day holiday, even as rates increased to their highest level in the last few months," Mike Fratantoni, chief economist at MBA, was quoted by Reuters.
