BOSTON – Mortgage rates fell for the first time in seven weeks, a move down thats likely to be temporary as the Federal Reserve considers scaling back its bond purchases amid signs of an improving economy.
The average rate for a 30-year fixed mortgage fell to 3.93 percent from 3.98 percent the previous week, McLean, Va.-based Freddie Mac said in a statement. The average 15-year rate decreased to 3.04 percent from 3.1 percent.
Fed Chairman Ben Bernanke said Wednesday that risks to the economy have decreased and policy makers could end bond purchases next year, sending yields for 10-year Treasuries, a benchmark for consumer debt, to a 15-month high.
Mortgage rates for 30-year loans have jumped to the highest since April 2012 on speculation the stimulus may be reduced, increasing borrowing costs for homebuyers as competition for a tight inventory of properties pushes up prices.
As interest rates begin to rise from their historic lows, some demand may also ebb from the market as home purchases become more expensive to finance, Stan Humphries, chief economist for Zillow Inc., said in a statement Thursday. While we believe the housing recovery will remain strong, home value appreciation will slow down, and buyers in it for the short term could get burned if they assume home values will continue rising as they have unabated.
Zillow, a Seattle-based real estate research company, reported that U.S. home values rose 5.4 percent in the 12 months through May.
Bernanke suggested the housing market may be strong enough to withstand higher borrowing costs. Asked by a reporter whether rates exceeding 4 percent would derail the rebound, Bernanke said that one important difference now is that people are more optimistic about housing and surveys show they expect prices to climb further.