UPDATE 1-U.S. 30-year mortgage rates rise to 7-1/2 year high -Freddie Mac

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NEW YORK, Nov 8 (Reuters) – Interest rates on U.S. 30-year fixed-rate mortgages climbed to their highest in more than seven years in step with a rise in bond yields following an upbeat October jobs report and on pressure from this week’s $83 billion Treasury supply, Freddie Mac said on Thursday.

Borrowing costs on 30-year mortgages, the most widely held home loan type in the United States, averaged 4.94 percent in the week ended Nov. 8, which was the highest since March 2011. They averaged 4.83 percent the week before, the mortgage finance agency said.

Rising mortgage rates have curbed home appreciation and mortgage application activity, analysts said.

They have pinched largely expensive real estate markets along the U.S. East and West coasts, not cheaper markets in the interior of the United States, Freddie Mac’s chief economist Sam Khater said.

“The more affordable interior markets – which have not yet experienced a slowdown in home price growth – may see price growth start to moderate and affordability squeezed if mortgage rates continue to march higher,” Khater said in a statement.

Other mortgage rates Freddie Mac tracks also reached multi-year peaks in the latest week.

The average rate on 15-year mortgages was 4.33 percent, the highest since May 2010, while five-year adjustable mortgage rates averaged 4.14 percent, matching the level set two weeks ago which was the highest since April 2010.

On Wednesday, the yield on benchmark 10-year Treasury notes touched 3.250 percent on poor demand at a record $19 billion 30-year bond auction and reduced safe-haven demand prompted by a rally on Wall Street.

It fell just short of the 7-1/2 year peak of 3.261 percent set on Oct. 9 during a bond market selloff due to worries about rising inflation and a faster pace of rate increases from the Federal Reserve.

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