WASHINGTON (AP) — US long-term mortgage rates climbed this week in a whip-sawing market amid deepening anxiety over devastation to the economy from the coronavirus pandemic.
Home loan rates had hit all-time lows two weeks ago. Mortgage buyer Freddie Mac reported Thursday that the average rate on the benchmark 30-year loan jumped to 3.65 percent this week from 3.36 percent last week.
Freddie Mac said the short-term rise was due to mortgage lenders increasing prices to deal with booming demand for refinancing into loans at historically low rates.
The average rate on the 15-year fixed-rate mortgage rose to 3.06 percent from 2.77 percent.
The recent decline trend in mortgage rates has been driven by investors shifting money out of the stock market and into the safety of US Treasurys as the crisis in confidence around the global viral outbreak has worsened. Long-term mortgage rates tend to track the yields on the 10-year Treasury note, so they typically fall in tandem.
Financial markets have shuddered amid a cascade of cancellations and shutdowns across the globe due to the COVID-19 virus. Wide swaths of the US economy have ground closer to a standstill as authorities ask Americans to stay home to slow the spread of the virus.
After weeks of stunning losses, US stock prices see-sawed between gains and losses on Wall Street on Thursday. Investors are weighing the growing likelihood of a recession against the massive emergency efforts by the Trump White House, Congress, and other authorities around the world to shore up economies.
The Dow Jones Industrial Average was up about 300 points, around midday, while the broader Standard & Poor’s 500 index was up around 30 points, or more than 1 percent.
The record low mortgage rates have been a boon to potential home buyers, and they give many homeowners an opening to refinance into lower-rate loans to free up money to spend or save.
But prospective buyers may be reticent to shop for homes amid the coronavirus outbreak, seeking to avoid social contact, experts note. That could slow home sales. And ultra-low mortgage rates aren’t likely to produce a significant rise in home sales this year because the supply of homes for sale remains at historic lows.
Each week, Freddie Mac surveys lenders to compile its national mortgage rate figures. The average doesn’t include extra fees, known as points, which most borrowers must pay to obtain the lowest rates.
The average rate for a five-year adjustable-rate mortgage jumped this week to 3.11 percent from 3.01 percent last week.