Mortgage rates in the U.S. climbed last month to their highest level in nearly seven years according to mortgage giant Freddie Mac. The 30-year no-point fixed mortgage rate is currently averaging 4.625 percent, compared to 3.83 percent a year ago.
Historically low mortgage rates for most of the past decade were responsible for driving U.S. home sales and refinances to near record levels. The current upward trend in borrowing costs is driven partly by expectations by bond traders of further increases.
“The robust economy, rising Treasury yields and the anticipation of more short-term rate hikes caused mortgage rates to move up,” said Sam Khater, Freddie Mac’s chief economist in a statement. He added however, that the market may be ready to absorb the higher rates. “Even with these higher borrowing costs, it’s encouraging to see that prospective buyers appear to be having a little more success. With inventory constraints and home prices starting to ease, purchase applications have now trended higher on an annual basis for six straight weeks.”
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