Long-term US mortgage rates hit highest levels since 2014

And last week, the Federal Reserve, citing improvement in the U.S. economy, raised short-term U.S. interest rates for only the second time in a decade. “The mortgage industry digested the Fed’s decision, and this week’s survey reflects that response,” said Sean Becketti, Freddie Mac’s chief economist.

More people are at risk of being priced out of the housing market because rates are rising at a time when there is a shortage of properties for sale, driving bids higher. The National Association of Realtors reported Wednesday that fewer than 1.9 million homes were for sale in November, down 9 per cent from a year ago. The median price of an existing home is up nearly 7 per cent from a year ago, at $234,900.

The Realtors predict that higher rates and declining affordability in many parts of the country likely will lead to only a small gain in sales of existing homes next year — a 2 per cent increase to about 5.52 million.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week.

The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 per cent of the loan amount.

The average fee for a 30-year mortgage was unchanged this week at 0.5 point. The fee on 15-year loans also remained at 0.5 point.

The fee on adjustable five-year loans stayed at 0.4 point.

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This story has been corrected to show that five-year adjustable mortgage rates were 3.32 per cent this week, not 3.41 per cent.

Paul Wiseman, The Associated Press

by Canadian Press

Long-term US mortgage rates hit highest levels since 2014

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