Yields on Fannie Mae and Freddie Mac mortgage securities climbed to the highest levels since October, signaling that interest rates on new home loans may extend a rebound from record lows this month.
Yields on Fannie Mae's current-coupon, 30-year fixed-rate mortgage bonds climbed 0.1 percentage point to 4.37% Monday morning, the highest level since Oct. 26.
The yields were up from 3.9% on Nov. 30, a seven-month low, suggesting a similar increase in mortgage rates. The gain tracked an increase in benchmark Treasury yields, which rose as investors speculated that an accelerating economic recovery will fuel inflation and damp demand for government debt as the U.S. borrows record amounts.
The average rate on a typical 30-year fixed-rate mortgage climbed to 4.94% in the week ended Dec. 17, according to Freddie. That was up from a record low of 4.71% set in the week ended Dec. 3, and down from a high this year of 5.59% in June.