Rate on 30-year mortgage rises to 3.40%

WASHINGTON — Average U.S. rates on fixed mortgages rose this week but remained close to record lows. Cheap mortgages have made home buying more affordable and helped drive a housing recovery.

Mortgage buyer Freddie Mac said Thursday that the average rate on the 30-year loan increased to 3.40 percent from 3.34 percent last week. That’s still near the 3.31 percent rate reached in November, the lowest on records dating to 1971.

The average on the 15-year fixed mortgage increased to 2.66 percent from 2.64 percent last week. The record low is 2.63 percent.

Mortgage rates tend to track the yield on the 10-year Treasury note. The yield on the note has risen this year from 1.70 percent to 1.89 percent Thursday.

A deal between Congress and the White House to avoid sharp tax increases and a mildly positive employment report for December led investors last week to buy stocks and sell Treasurys. As demand for Treasurys declines, the yield increases.

Even with the increase, mortgage rates are hovering near historic lows. The 30-year fixed mortgage rate averaged 3.66 percent in 2012, the lowest annual average in 65 years, according to Freddie Mac.

Cheaper mortgages are a key reason the housing market began to come back last year. Many economists predict the housing recovery will strengthen in 2013.

Home prices are steadily increasing, which makes consumers feel wealthier and more likely to spend.

Another reason for the housing rebound is that there aren’t enough houses for sale. A limited supply has created demand for new construction, which has made builders more confident.

Lower mortgage rates also have persuaded more people to refinance. That typically leads to lower monthly mortgage payments and more spending. Consumer spending drives nearly 70 percent of economic activity.

Still, the housing market has a long way to a full recovery. And many people are unable to take advantage of the low rates, either because they can’t qualify for stricter lending rules or they lack the money to meet larger down payment requirements.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for 30-year loans was unchanged at 0.7 point. The fee for 15-year loans ticked up to 0.7 from 0.6 point.

The average rate on a one-year adjustable-rate mortgage rose to 2.60 percent from 2.57 percent. The fee for one-year adjustable-rate loans edged up to 0.5 from 0.4 point.

The average rate on a five-year adjustable-rate mortgage declined to 2.67 percent from 2.71 percent last week. The fee was steady at 0.6 point.

More in Herald Business Journal

Peoples, HomeStreet banks bump lowest salaries after tax cut

The banks with Snohomish County branches will raise minimum salaries for employees to $15 an hour.

Electroimpact cuts Mukilteo staff by 9 percent

“What we’re missing now is a monster anchor project,” the company’s VP said.

Exotic animals find compassionate care in Bothell (video)

At the Center for Bird and Exotic Animal Medicine, vets treat snakes, hedgehogs and even kangaroos.

How can you tell if you are getting good financial advice?

Assume that it’s still the same buyer-beware market that has always existed.

Amanda Strong (left) tries on an Angel of the Winds Arena hat as she and Courtney Brown hand out gift bags after the renaming ceremony Dec. 13 in Everett. The new name replaces the Xfinity name. (Andy Bronson / Her file)
Angel of the Winds to break ground on $60M casino expansion

“We think we’re on the cusp of becoming a major resort.”

In this Dec. 20, 2017, photo, a clerk reaches to a shelf to pick an item for a customer order at the Amazon Prime warehouse, in New York. (AP Photo/Mark Lennihan, File)
Amazon’s potential HQ2 sites leaves many cities disappointed

And yet, some municipal leaders are looking at the bright side of being rejected.

How do you retrieve an errant Boeing 737 from a muddy slope?

Turkish authorities used cranes to lift a plane that skidded off a runway.

Don’t take economic forecasts to the bank — or the casino

Air travel delays could spur a rebirth of passenger rail service.

Emirates orders 20 more Airbus A380 jumbos, saving program

The Dubai carrier also has options to buy 16 more. The program seems safe until 2029.

Most Read