US mortgage rates rise, though remain historically low

WASHINGTON – U.S. mortgage rates rose this week as the economy showed signs of strength, which makes it more likely that the Federal Reserve will raise its short-term rate next week.

The rate on the benchmark 30-year fixed-rate mortgage rose to 3.94 per cent from 3.9 per cent last week, mortgage giant Freddie Mac said. The 15-year, fixed-rate mortgage, popular among homeowners seeking to refinance, also increased, rising to 3.36 per cent from 3.3 per cent.

The five-year adjustable mortgage rate rose for the third straight week to 3.35 per cent from 3.32 per cent last week.

Shorter-term rates are rising more quickly than longer-term debt, and the gap between the 30-year mortgage and five-year has narrowed since the summer. As a result, more homebuyers are choosing the longer-term fixed rate, Freddie Mac said.

Even with the increase, the 30-year rate is down from the beginning of the year, when it stood at 4.13 per cent. Any rate below 5 per cent is low by historic standards.

The number of people seeking unemployment benefits is near a four-decade low and surveys of manufacturers and service firms point to healthy growth.

Federal Reserve policymakers meet next week and are widely expected to lift their short-term rate for the third time this year.