U.S. mortgage rates have climbed to the highest level in almost three months as the Federal Reserve banks ended a program that helped cut borrowing costs for homebuyers.
Rates for 30-year fixed loans rose to 5.08% for the week that ended April 1 from 4.99% the previous week, Freddie Mac said last week. That's the highest rate since the period that ended Jan. 7. The average 15-year rate was 4.39%.
Fed purchases of $1.24 trillion in securities backed by U.S. residential mortgages helped reduce rates during the past year, pushing them to a record low of 4.71% in December.
Fixed mortgage rates probably will rise less than a quarter of a percentage point in the next three months, according to estimates by Fannie Mae and Freddie Mac. The gain would add about $30 to the monthly payment on a $250,000 mortgage.
"I don't think the Fed is terribly worried about the handoff," Donald Rissmiller, the chief economist at Strategas Research Partners in New York, said in an interview.
"The housing market is seasonally picking up and I don't think there's any incentive for the Fed to let something short-circuit this recovery as long as it's in their control."
The government bond purchases from Fannie Mae, Freddie Mac and Ginnie Mae — agencies that buy home loans from lenders and package them into securities — brought down yields and allowed lenders to reduce mortgage rates while still selling the bonds at a profit. The program concluded Wednesday.