Some LI mortgage rates tick up this week
WASHINGTON -- The average rate on the 30-year fixed mortgage rose across the nation this week after falling to record lows in each of the past 13 weeks. On Long Island, two of three rates inched up.
Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan jumped to 3.55 percent. That's up from 3.49 percent this past week, which was the lowest since long-term mortgages began in the 1950s.
The average rate on the 15-year fixed mortgage, a popular refinancing option, increased to 2.83 percent. That's above last week's record low of 2.80 percent.
On Long Island, the 30-year fixed rate rose to 3.78 percent from 3.65 percent the previous week. The 15-year fixed rate rose to 3.28 percent from 3.21 percent the week before. The 1-year adjustable rate was unchanged at 3.63 percent. The rates are calculated for Newsday by HSH Associates at HSH.com.
Low interest rates on mortgages have helped drive a modest but uneven housing recovery this year. Sales of new and previously occupied homes fell in June from May but were higher than the same month last year. Home prices have started to rise in most U.S. cities.
Builders are also more confident after seeing more demand for homes. In June, they increased their spending for a third straight month.
Low mortgage rates could also provide some help to the economy if more people refinance. When people refinance at lower rates, they pay less interest on their loans and have more money to spend. Many homeowners use the savings on renovations, furniture, appliances and other improvements, which help drive growth.
Still, the pace of home sales remains well below healthy levels. Many people are still having difficulty qualifying for home loans or can't afford larger down payments required by banks.
The Federal Reserve said Wednesday that the economy is losing strength and repeated a pledge to take further steps if the job market doesn't show sustained improvement.
The Fed took no new action after its two-day meeting. But it acknowledged that economic activity had slowed over the first half of the year, unemployment remains elevated and consumer spending has weakened.
Mortgage rates have been dropping because they tend to track the yield on the 10-year Treasury note. A weaker U.S. economy and uncertainty about how Europe will resolve its debt crisis have led investors to buy more Treasury securities, which are considered safe investments. As demand for Treasurys increase, the yield falls.
To calculate average rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.
The average does not include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fee for 30-year loans was 0.7 point, unchanged from last week. The fee for 15-year loans slipped to 0.6 point from 0.7 the previous week.
The average rate on one-year adjustable rate mortgages fell to 2.70 percent from 2.71 percent. The fee for one-year adjustable rate loans declined to 0.4 point from 0.5 point.
The average rate on five-year adjustable rate mortgages rose to 2.75 percent from 2.74 percent last week. The fee was unchanged at 0.6.