Long-term U.S. mortgage rates jump

Long-term U.S. mortgage rates leaped this week to their highest levels in seven years amid global anxiety over rising interest rates that has gripped financial markets.

Costs for would-be homebuyers are climbing. Mortgage buyer Freddie Mac said Thursday the rate on 30-year, fixed-rate mortgages jumped to an average 4.9% this week from 4.71% last week. That’s the highest level for the benchmark rate since April 2011. A year ago, it stood at 3.91%.

The average rate on 15-year, fixed-rate loans rose to 4.29% this week from 4.15% last week.

The Federal Reserve recently signalled its confidence in the economy by raising a key interest rate for a third time this year, forecasting another rate hike before year’s end.

Strong economic data and a positive outlook from Fed officials have spurred a sell-off in U.S. Treasury bonds, especially longer-term bonds, stoking concerns over even higher interest rates.

As anxiety over higher rates spiralled, financial markets around the world suffered a massive sell-off. U.S. stocks marked their biggest drop since February on Wednesday, as the Dow Jones industrial average slid 831 points. Stocks sank again on Wall Street on Thursday morning.

Read: Global market drop-off could be buying opportunity

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.

The average fee on 30-year fixed-rate mortgages rose to 0.5 point from 0.4 point last week. The fee on 15-year mortgages also increased to 0.5 point from 0.4 point.

The average rate for five-year adjustable-rate mortgages jumped to 4.07% from 4.01% last week. The fee was unchanged at 0.3 point.

The Associated Press

The Associated Press is an American not-for-profit news agency headquartered in New York City and founded in 1846.