Tue 3 Jun 2008
US mortgage rates rise
Any hopes of an early US housing Market recovery appear to have been dashed after a surge in US mortgage rates last week amid a sharp rise in Treasury market yields. This suggests that the Federal Reserve may raise interest rates later this year.The sell-off pushed rates on 30-year fixed-rate mortgages to an 11-week high of 6.02%, up from 5.81% a week earlier, according to Bankrate.com. Furthermore, larger loans for properties priced above $417,000 (approx £212,000) have gone up to 7.21% from 7.05%.
Consequently, US mortgage borrowing rates are now running at their highest level since mid-April, which makes it more expensive for locals to buy homes in the States, thus dampening the chances of an early recovery in the US housing market.
Frank Nothaft, chief economist at Freddie Mac, said: “Market inflation expectations increased over the last few weeks and the federal funds futures market now has a 25 basis point rate hike priced in by the end of the year.”
Have your say and comment on this article