U.S. Mortgage Rates Hit 7 Year High, Approaching 5 Percent in May

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As mortgage rates approach 5 percent, consumer psyche kicks in

Based on Freddie Mac's latest Primary Mortgage Market Survey, after plateauing in recent weeks, U.S. mortgage rates reversed course and reached a new high last seen eight years ago.

Sam Khater, Freddie Mac's chief economist, says the 30-year fixed mortgage rate edged up to 4.61 percent, which matches the highest level since May 19, 2011.

"Healthy consumer spending and higher commodity prices spooked the bond markets and led to higher mortgage rates over the past week," he said. "Not only are buyers facing higher borrowing costs, gas prices are currently at four-year highs just as we enter the important peak home sales season."

Added Khater, "While this year's higher mortgage rates have not caused much of a ripple in the strong demand levels for buying a home seen in most markets, inflationary pressures and the prospect of rates approaching 5 percent could begin to hit the psyche of some prospective buyers."

Freddie Mac News Facts

• 30-year fixed-rate mortgage (FRM) averaged 4.61 percent with an average 0.4 point for the week ending May 17, 2018, up from last week when it averaged 4.55 percent. A year ago at this time, the 30-year FRM averaged 4.02 percent.

• 15-year FRM this week averaged 4.08 percent with an average 0.4 point, up from last week when it averaged 4.01 percent. A year ago at this time, the 15-year FRM averaged 3.27 percent.

• 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.82 percent this week with an average 0.3 point, up from last week when it averaged 3.77 percent. A year ago at this time, the 5-year ARM averaged 3.13 percent.