McLEAN, Va. – Long-term mortgage rates surged this week to their highest level in eight months, the result of the ongoing turmoil in the financial markets.
According to Freddie Mac, the average for the benchmark 30-year, fixed-rate loan jumped from 5.94% last week all the way to 6.46% this week–the 52 basis point surge being the largest one-week rise since April 1987, when rates rose by 84 bps.
The average for the 15-year, fixed-rate mortgage climbed from 5.63% to 6.14%.
ARM rates also moved higher, with the average for the five-year ARM rising from 5.90% last week to 6.14% this week; and the average for the one-year ARM climbing only slightly from5.15% to 5.16%.
Bill Hampel, chief economist for CUNA, attributed the surge in long-term rates to the rise in ten-year Treasury yields, which soared over the past week from an average of 3.48% to 4.08%.
He called it a "backing off of the flight to quality," in which ten-year Treasury yields, to which the 30-year mortgage rates are pegged, moved higher because investors who had moved into Treasuries in recent weeks, backed off this week. "Over the last several days a lot of the money moving into Treasuries moved out, pushing Treasury rates back up," Hampel told The Credit Union Journal yesterday.
