Thirty-year fixed mortgage rates, the norm in the US, have soared to 4.46%, up more than 1% on a month ago, and a jump from 3.93% last week. The average rate on a 15-year fixed mortgage, a term popular with remortgagors, jumped from 3.04% last week to a two-year high of 3.5% this week.
While this still leaves rates in relatively affordable territory in historic terms, the increase means the monthly repayments on a $200,000 taken out today would cost $1,008, compared to $881 on the same loan taken out at 3.35% a month ago.
The leap in rates comes following indications from the Federal Reserve that it is likely to slow down its bond purchase programme, similar to the Quantitative Easing measures taken by the Bank of England.
The signals caused the yields on 10-year US Treasury bills to start rising from all-time lows in May. US mortgage rates tend to track these 10-year ‘T-Bill rates’.
