Editor’s note: This story has been corrected to note that mortgage rates hit record lows during the week ending Nov. 11.
Mortgage rates continue to rise as more investors gain confidence in the economy, making safe bets like Treasurys and mortgage-backed securities that fund home loans less attractive, Freddie Mac said in releasing the results of its weekly Primary Mortgage Market Survey.
"After Europe made strides in its debt situation, investors left the security of U.S. Treasury debt causing bond yields to rise and mortgage rates along with them," said Freddie Mac Chief Economist Frank Nothaft.
The increase in Treasury yields also coincided with President Obama’s announcement of a pact with Republican lawmakers to extend the Bush-era tax cuts for high-income taxpayers for two more years in exchange for extending federal unemployment insurance for the long-term jobless and payroll tax cuts for one year.
Taken together, those moves are expected to increase the government’s deficit spending.
Interest rates for 30-year fixed mortgages are now almost a half percentage point higher than the record low of 4.17 percent set during the week ending Nov. 11, adding $50 to the monthly payments on a $200,000 conventional loan, Nothaft said.
A separate survey by the Mortgage Bankers Association showed demand for refinancings continued to wane last week, although purchase loan demand picked up for the third week in a row to its highest level since May.
Freddie Mac’s rate survey found 30-year fixed-rate mortgages averaged 4.61 percent with an average 0.7 point for the week ending Dec. 9, up from 4.46 last week but down from 4.81 percent a year ago.
Rates on 15-year fixed-rate loans averaged 3.96 percent with an average 0.7 point, up from 3.81 percent last week but down from 4.32 percent a year ago.
The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.6 percent with an average 0.6 point, up from 3.49 percent last week but down from 4.26 percent a year ago.
Rates on 1-year Treasury-indexed ARMs averaged 3.27 percent with an average 0.6 point, up from 3.25 percent last week but down from 4.24 percent a year ago.