April 8 (Bloomberg) -- U.S. mortgage rates jumped to the highest level in almost eight months, increasing borrowing costs for buyers and signaling a threat to the housing market’s recovery as government efforts to spur demand end.
Rates for 30-year fixed loans rose to 5.21 percent for the week ended today from 5.08 percent, mortgage finance company Freddie Mac said in a statement. That’s the highest rate since the week ended Aug. 13. The average 15-year rate was 4.52 percent, according to the McLean, Virginia-based company.
Loan rates are climbing from record lows last year as the economy shows signs of strengthening and after the Federal Reserve completed a program of buying about $1.25 trillion of securities backed by U.S. residential mortgages. Rising borrowing rates and the expiration of homebuyer tax credits this month may reduce demand for homes......................
............................Homes for Sale
The number of existing homes for sale jumped 9.5 percent in February, data from the National Association of Realtors show. Government tax credits for first-time home buyers and some current owners expire April 30.
The Fed’s program of buying mortgage-backed securities, which ended last week, helped reduce rates to a record low of 4.71 percent in December. The average 30-year rate over the past decade is 6.2 percent, with a high of 8.64 percent in May 2000, Freddie Mac data show.
The government bond purchases from Fannie Mae, Freddie Mac and Ginnie Mae, agencies that buy home loans from lenders and package them into securities, brought down yields and allowed lenders to reduce mortgage rates while still selling the bonds at a profit.
The Mortgage Bankers Association’s index of mortgage applications fell 11 percent in the week ended April 2. The portion of refinancings dropped 17 percent. Applications to purchase a home increased 0.2 percent.
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