Mortgage rates jump to 2-year high

business

 

WASHINGTON — US mortgage rates have suddenly jumped from near-record lows and are adding thousands of dollars to the cost of buying a home.

The average rate on the 30-year fixed loan soared this week to 4.46 percent, according to a report Thursday from mortgage buyer Freddie Mac. That is the highest average in two years and a full point more than a month ago.

The surge follows the Federal Reserve’s signal that it could slow its bond purchases this year. A pullback would probably send long-term interest rates even higher.

In the short run, the spike in rates might be causing more people to consider buying a home soon. Rates are still low by historical standards, and would-be buyers would want to lock them in before they rise further.

But eventually, more expensive home loans could price some people out and slow the housing market’s momentum.

‘‘People are getting off the fence a little bit more or choosing to buy now instead of choosing to buy three months from now,’’ said Anthony Geraci, a Cleveland real estate broker-owner.

Mortgage rates are rising because they tend to track the yield on the 10-year Treasury note, a benchmark for most long-term interest rates. The 10-year yield began rising from near-record lows in May after speculation grew that the Fed might be closer to reducing its bond purchases.

In early May, the average rate on a 30-year mortgage was 3.35 percent, just above the record low of 3.31 percent.

But rates began to surge after Fed chairman Ben Bernanke made more explicit comments about the Fed’s plans. He said the Fed would probably scale back its bond-buying later this year and end it next year if the economy continued to strengthen.

The rate on 30-year loan soared from 3.93 percent last week to 4.46 percent this week — the biggest one-week jump in 26 years.

The effect on buyers’ wallets in just the past two months is striking.

A buyer who locked in a 3.35 percent rate in early May on a $200,000 mortgage would pay $881 a month, according to Bankrate.com. The same mortgage at a 4.46 percent rate would run $1,008 a month.

The difference: $127 more a month, or $45,720 over the lifetime of the loan. Those figures don’t include taxes, insurance, or initial down payments.

The rate hike comes at a critical time. Low mortgage rates have helped fuel a housing recovery that has kept the economy growing modestly, despite higher taxes and steep federal spending cuts.

Lower rates have also inspired a refinancing boom over the past two years. Many homeowners have locked in rates below 4 percent. That has lowered their monthly payments, leaving them with more cash to spend elsewhere and fuel more economic growth.

The average rate on a 15-year fixed mortgage, a popular refinancing instrument, soared this week to 3.50 percent — its highest point since August 2011 — from 3.04 percent last week.