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Rates for home loans powered to the highest since 2011, setting up a fresh test for a housing market already strained by lean supply and surging prices.
The 30-year fixed-rate mortgage averaged 4.61% in the week ending May 17, mortgage finance provider Freddie Mac said Thursday. That was a 6 basis point jump, and marked the highest for the popular product since May, 2011. The 15-year fixed-rate mortgage averaged 4.08%, up 7 basis points during the week. The 5-year Treasury-indexed hybrid adjustable-rate averaged 3.82%, up from 3.77%.
Mortgage rates follow the path of the benchmark 10-year U.S. Treasury note, which is also at its highest since 2011. After several hiccups in the spring, investors are once again selling bonds, believing that higher inflation and more government borrowing will erode the value of fixed-income assets that have already been issued.
Bond yields rise as prices decline.
The 30-year fixed-rate mortgage is still substantially lower than its long-time average, but that’s cold comfort for would-be home buyers. Home prices aren’t just rising faster than incomes are, they’re accelerating.
“The prospect of rates approaching 5% could begin to hit the psyche of some prospective buyers,” Freddie Chief Economist Sam Khater said.
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