11 September 2103
With interest rates rising, it’s getting harder to find a great deal on a home loan these days — unless you’re rich enough to be looking for a jumbo mortgage.
Mortgage rates rose early this week, Freddie Mac said in its latest report, with lenders offering a 30-year fixed home loan to solid borrowers at an average of 4.57 percent — up from 4.51 percent last week and a full percentage point higher than a year ago.
Rates for 15-year fixed mortgages and adjustable loans also edged higher, a trend Freddie Mac chief economist Frank Nothaft attributed to a healthier-looking economy. He pointed to stronger growth in the gross domestic product and other indicators.
Additional positive economic reports Thursday drove the yield on the 10-year Treasury note — a benchmark for fixed mortgage rates — to nearly 3 percent. That was its highest level since July 2011, and home lending rates were volatile but continuing to move higher, mortgage professionals said.
Freddie Mac asks lenders each week about the terms they are offering to people with good credit, enough income to cover payments and 20 percent down payments. The borrowers in the latest survey would have paid lenders an average of 0.7 percent in upfront discount points and fees to obtain the quoted rates.
The improving economy also has contributed to another trend — heavy competition among lenders to make jumbo mortgages. The outsize loans, too big to be backed by Freddie Mac or its sister finance company, Fannie Mae, are written mainly for affluent residents of the East and West coasts, where home prices have risen rapidly in the past year.
The Mortgage Bankers Association says jumbo loan rates are now lower than those for smaller, so-called conforming mortgages that can be sold to or guaranteed by Freddie and Fannie.
Fannie and Freddie guidelines cap conforming loans at $417,000, with higher limits in areas where home prices are high.