Mortgage rates bounced higher this week, tracking a sharp jump in Treasury bond yields as investors bet on a healthier economy ahead.
The average interest rate on 30-year fixed-rate mortgages for the week ending March 21 was 5.79%, up from last week's record low rate of 5.61%, lending giant Freddie Mac reported Thursday in its weekly nationwide survey.
Long-term Treasury bond yields, which provide a benchmark for mortgages, have surged over the last week as more investors have sold bonds in favor of stocks. The bet has been that the U.S.-Iraq war would be over quickly, removing uncertainty and paving the way for the weak economy to rebound in the second half of the year.
The 10-year Treasury note yield hit a generational low of 3.56% on March 10. On Thursday it was at 3.96%.
Last week's average home loan rate was the lowest since Freddie Mac began tracking 30-year mortgage rates in 1971. Records that reach back earlier than Freddie Mac's indicate that the rate was the lowest since the early 1960s.
For 15-year fixed-rate mortgages, a popular option for refinancing, rates also went up this week to 5.11%. That compared with 4.93% the week before, which marked the lowest rate since Freddie Mac began tracking 15-year mortgages in 1991.
On one-year adjustable-rate mortgages, rates rose this week to 3.75%, up from last week's 3.68%.
Low mortgage rates propelled home sales and home mortgage refinancing activity to record levels last year. Refinancing demand has rocketed again in recent weeks. As homeowners swap higher-rate home loans for lower interest rate ones, the extra cash is expected to support consumer spending.
A year ago, rates on 30-year mortgages averaged 7.14%, 15-year mortgages were 6.65% and one-year adjustable mortgages stood at 5.11%.
This week's mortgage rates do not include add-on fees known as points. Thirty-year and one-year ARMs each carried an average fee of 0.6 point this week. Fifteen-year mortgages carried an average fee of 0.5 point.