The US average rate for a 30-year fixed-rate mortgage surged this week to its highest level this year, climbing above 4 percent for the first time in eight months.
According to data released Thursday by Freddie Mac, the average rate for a 30-year fixed-rate mortgage increased to 4.04% in the week ended June 11 from 3.87% the week before.
The rate on 15-year fixed-rate mortgages also increased, from 3.08 percent up to 3.25 percent.
The US economy has shown signs of improvement over the past few months. As a result, bond prices have dropped and yields have increased. Yield refers to the interest rate of bonds, the annual income they provide.
The yield on a 10-year treasury note, which mortgage rates often follow, jumped to a year high of 2.49 percent on Wednesday.
Last week the US government announced that employers added 280,000 jobs in May. In April the number of workers who quit was 11% higher than the previous year, suggesting that those with work are willing to leave their jobs to look for better paying ones.
Len Kiefer, Freddie’s deputy chief economist, said:
“Mortgage rates rose above 4% for the first time since November 2014 as Treasury yields surged. Markets are responding to strong employment data.”
The increase in rates is expected to have more of an impact on people looking to refinance than new homebuyers.
However, it should be noted that the number of people applying to buy a home has jumped up to a two-year high, which is mainly because of a more robust labor market.
In addition, it is now easier to get home-loan approved, with lenders approving more loans compared to any period this decade.