“WASHINGTON – Long-term mortgage rates climbed this week, reflecting deep declines in US government bond prices in the days after Donald Trump’s election victory.
Mortgage giant Freddie Mac said Thursday the average for a 30-year, fixed-rate mortgage jumped to 3.94% from 3.57% last week. That put the benchmark rate close to its year-ago level of 3.97%
The 15-year fixed-rate mortgage, popular with homeowners who are refinancing, advanced to 3.14% from 2.88%
The rate rise was powered by a sustained decline in US government bond prices in the days after Trump’s victory became known early Nov. 9. Bond investors looked toward tax cuts and beefed up spending on infrastructure under a Trump administration, which could fuel inflation and erode Treasury bond prices. The selling wave dubbed the “Trump Dump” lifted bond yields, which move opposite to prices and influence long-term mortgage rates.
The yield on the 10-year Treasury bond jumped to 2.06% last Wednesday from 1.87% on Election Day Tuesday. By Thursday, it was 2.25%
Fed Reserve Chair Janet Yellen, citing an improving economy, said again Thursday that the Fed is more likely to raise interest rates soon.
To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week.
SOURCE: Associated Press/Asheville Citizen-Times