Mortgages
- 4.74% (30-year fixed)
- 0.35 (average points)
With the impasse over the national debt ceiling giving jitters to financial markets, mortgage rates ticked upward along with the uncertainty about the federal budget.
The 30-year fixed-rate mortgage climbed 6 basis points, to 4.74 percent from 4.68 percent last week. A basis point is one-hundredth of 1 percentage point.
Another popular mortgage product, the 15-year fixed-rate home loan, rose to 3.83 percent from the 3.82 percent rate of the last two weeks. The average rate for 30-year jumbo mortgages, or generally for those for more than $417,000, was 5.19 percent, up 2 basis points.
Adjustable-rate mortgages ran counter to the fixed-rate trend. The 5/1 ARM dipped to 3.34 percent compared to last week's 3.36 percent. With a 5/1 ARM the rate is fixed for five years and adjusted annually thereafter.
Mortgage rates are heavily influenced by the yields on federal debt instruments, known as Treasuries. And the budget gridlock in Washington has produced the possibility that the government could default on its obligations in early August. Also, the credit rating agencies have warned that they may downgrade U.S. federal debt, which is currently rated a top-tier AAA and historically has been considered effectively riskless by global investors.
As a result of the negative outlook, Treasuries have lost some appeal among investors. That has lowered their prices. That meant yields, or interest rates, which move inversely to price, have risen in the last week.
Mortgage rates also are affected by market conditions and lender competition. Housing remains mired in a slump, but the latest Standard & Poor's/Case-Shiller home price index held out some hope that things may be improving.
The Case-Shiller index found home prices rose in the 20 largest metro areas 1 percent from April to May. It was the second consecutive month of price gains, with April rising 0.7 percent compared to March.
Nevertheless, prices remain below where they were a year earlier, noted David Blitzer, chairman of the index committee at Standard & Poor's. In a statement accompanying the study, Blitzer said "the seasonally adjusted numbers show that much of the improvement reflects the beginning of the spring-summer homebuying season. It is much too early to tell if this is a turning point or simply due to some warmer weather."