Mortgage rates up as Treasury yields continue to climb

For nearly two months, fixed mortgage rates remained in a tight range below 3%, refusing to budge.

This week, rising Treasury yields caused them to finally break out of their doldrums.

According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average shot up to 3.01%.

It was 2.88% a week ago and 2.88% a year ago.

The 30-year fixed rate hadn’t been above 3% since June.

Freddie Mac, the federally chartered mortgage investor, aggregates rates from around 80 lenders across the country to come up with weekly national averages.

The survey is based on home purchase mortgages. Rates for refinances may be different.

It uses rates for highquality borrowers with strong credit scores and large down payments.

Because of the criteria, these rates are not available to every borrower.

The 15-year fixed-rate average climbed to 2.28%. It was 2.15% a week ago and 2.36% a year ago.

The five-year adjustable rate average rose to 2.48%. It was 2.43% a week ago and 2.9% a year ago.

“The Freddie Mac fixed rate for a 30-year loan jumped this week along with the 10-year Treasury yield, ending a seven-week streak of little or no movement,” said Danielle Hale, Realtor.com chief economist.

“These increases were caused by the recognition that the economy is doing well and that growth will likely continue. This sentiment was supported by the Fed’s statement last week that the economy had made enough progress toward economic goals that tapering of asset purchases may be warranted soon.”

The yield on the 10-year Treasury has been on a steady climb since the Federal Reserve concluded its meeting last week.

At the meeting, the Fed signaled it could begin reducing, or tapering, its bond-buying program after its next meeting in November.

Yields rise when bond prices fall.

Investors are selling bonds in part because the Fed revised its expectations for inflation.

Rising inflation erodes the value of bonds, and investors demand more in return for holding them.

Mortgage rates tend to follow a similar path as long-term bonds, although that has been less the case lately.

Meanwhile, the rebound in mortgage applications was short-lived.

According to the latest data from the Mortgage Bankers Association, the market composite index — a measure of total loan application volume — decreased 1.1% from a week earlier.

Both the refinance index and the purchase index were down 1%.

The refinance share of mortgage activity accounted for 66.4% of applications.