WASHINGTON (AP) — Long-term US mortgage rates rose this week after three weeks of declines, marking their first increase of the year.
Mortgage buyer Freddie Mac said Thursday the rate on 30-year fixed-rate loans climbed to an average 4.19 percent from 4.09 percent last week. That was still sharply higher than a 30-year rate that averaged 3.65 percent for all of 2016, the lowest level recorded from records going back to 1971. A year ago, the benchmark rate stood at 3.79 percent.
The average for a 15-year mortgage increased to 3.40 percent from 3.34 percent last week.
Mortgage rates surged in the weeks since the election of Donald Trump in early November. Investors in Treasury bonds bid yield rates higher because they believe the president-elect's plans for tax cuts and higher spending on roads, bridges and airports will drive up economic growth and inflation.
That would depress prices of long-term Treasury bonds because inflation would erode their value over time, a prospect that caused investors to demand higher yields.
In the latest week, the price of the benchmark 10-year Treasury bond dropped, pushing up its yield.
Bond yields move opposite to prices and influence long-term mortgage rates. The yield on the 10-year Treasury note climbed to 2.52 percent Wednesday from 2.42 percent a week earlier. The yield continued its steady march higher since Election Day Nov. 8, when it stood at 1.87 percent. It held steady at 2.52 percent Thursday morning.
To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday 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 a 30-year mortgage fell this week to 0.4 point from 0.5 point. The fee on 15-year loans also slipped to 0.4 point from 0.5 point.
Rates on adjustable five-year loans eased to 3.20 percent from 3.21 percent. The fee was unchanged at 0.4 point.