Mortgage rates move higher along with bond yields

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Interest rates offered by mortgage lenders edged higher this week, with the typical rate on a 30-year fixed home loan at 4.99%, up from 4.96% last week, Freddie Mac said Thursday in its weekly report.

It was the fourth consecutive week that the survey recorded rates under 5% for the 30-year mortgage. It seemed likely that mortgage rates would creep still higher, given a spike this week in the interest rates, or yield, being paid on U.S. Treasury securities, which home lending rates generally follow.

‘Mortgage rates inched up slightly this week,’ Frank Nothaft, Freddie Mac’s chief economist, said in a statement. But he added, ‘bond yields rose even further.’

Freddie Mac, the giant buyer and guarantor of mortgages that is now controlled by the government, was expected to post the survey on its website later Thursday.

It said the 4.99% rate was being offered to well-qualified borrowers with a 20% down payment who paid 0.6% of the loan balance in upfront charges to the lender or broker.

The 15-year fixed rate mortgage averaged 4.34% this week with 0.6% in upfront lender charges, up from 4.33% last week.

The five-year Treasury-indexed hybrid adjustable rate mortgage, which has a fixed rate for the first five years, had an average start rate of 4.14% this week with an average 0.6% in lender charges, up from 4.09% last week.

The one-year Treasury-indexed ARM averaged 4.20% this week with 0.6% in lender charges, compared with 4.12% last week.

Mortgage industry professionals say well-qualified borrowers often can negotiate better rates than those in Freddie Mac’s survey of lender offering rates.

Fixed mortgage rates tend to track the yield on the 10-year Treasury bond, which had risen by about a fifth of a percentage point from Tuesday to Thursday morning.

Among the causes of the rise was a U.S. Labor Department report that showed a greater than expected drop in first-time claims for unemployment benefits. This was a good sign for the economy and sent stocks higher Thursday morning. But an improving economy would bring the threat of rising inflation, which would force interest rates higher.

-- E. Scott Reckard