Mortgage rates have hit a two year high, now standing at 4.51 percent for a 30-year fixed-rate mortgage. This is the highest the rates have been since the summer of 2011. With the increase for a 15-year fixed-rate mortgage rising from 3.39 percent to 3.53 percent.
Compared to last year, where the rate averaged 2.86 percent, it is not good news for home owners, who will now be forced to pay heftier repayments.
The vice president of Freddie Mac, (Federal Home Loan Mortgage Corporation), Frank E Nothaft said the rise in mortgage rates was due to speculation surrounding the central banks possible move to diminish its efforts in stimulating the economy. According to him the economy enjoyed an additional 195,000 work positions last month, which exceeded the current market expectations.
“June’s strong employment led to more market speculation that the Federal Reserve will reduce future bond purchases causing bond yields to rise and mortgage rates followed.”
Keith Gumbinger, vice president of HSH.com. a mortgage information resource, blamed the two year mortgage rate high on the economy itself saying:
“Strengthening employment data put the bond and mortgage markets on the defensive again.The employment report for June, released last Friday, was firmer than expected, and upward revisions to April and May figures showed that hiring is on stronger footing than was previously believed.”
Translated into facts on the ground. this means that the average homeowner will have to pay roughly $65 extra per month in mortgage repayments. for every $100,000 borrowed.