The average rate of U.S. 30-year fixed mortgage rose this week to 4.51 percent, reaching a two-year high following the anticipation that the Federal Reserve would lower future bond purchases, according to Freddie Mac.
The 30-year fixed-rate mortgage for the week ending July 11 was up from last week when it averaged 4.29 percent. Last year at this time, it averaged 3.56 percent.
Meanwhile, the 15-year fixed rate mortgage averaged 3.53 percent, up from 3.39 percent last week and 2.86 percent from a year ago.
The sharp rise of mortgage rates over the recent weeks follows speculation that the Federal Reserve will lower its $85 billion in monthly purchases of Treasury bonds and mortgage-backed securities. That stimulus program has kept long-term interest rates low.
"That stimulus was so small compared to a 3.5 percent interest rate, it's almost not even a comparable, but it's the only thing I can find," said mortgage analyst Mark Hanson, according to CNBC news. "When that stimulus went away, new home sales fell 38 percent in a single month, down 25 percent year-over-year, and existing home sales fell 30 percent over a single month, 24 percent year-over year."
Over time, rising mortgage rates should slow down recent price growth. "For instance, at 3.35% the monthly payment on a $200,000, 30-year fixed-rate loan is $881; at 4.46% the payment jumps to $1,009 - that's a 14% jump in the monthly mortgage payment between early May and late June," according to Trulia.
