By Agency reporter

Friday, 31 Dec 2010

Mortgage rates for United States loans climbed to a seven-month high, increasing borrowing costs for homebuyers in a sluggish real estate market, Bloomberg reported on Thursday.

The average rate for a 30-year fixed loan rose to 4.86 per cent in the week ended Thursday from 4.81 per cent, Freddie Mac said in a statement. The average 15-year rate advanced to 4.2 per cent from 4.17 per cent, the mortgage-finance company said.

Rising home loan rates may limit homebuyer demand as housing remains a weak link for the economy. Home prices in October fell by 0.8 per cent from a year earlier, the largest year- over-year decline since December 2009, the S&P/Case-Shiller index of property values showed this week.

”Optimism is fading from the housing market,” an economics professor at Yale University and co- creator of the index, Robert Shiller, said on Bloomberg Television on December, 28.

Sales of new and existing homes rose less than economists estimated in November even as mortgage rates sank to the lowest levels on record, reports from the Commerce Department and the National Association of Realtors showed last week.

Pending home sales climbed more than forecast in November, a sign demand is recovering following a post-tax credit plunge, according to a report from the Realtors group today. The data are based on contract signings, while existing-home sales represent closings.

The rate for a 30-year loan has climbed for six of the past seven weeks amid speculation that President Barack Obama‘s agreement to a two-year tax cut extension will boost economic growth and inflation. The rise pushed the monthly cost of a $300,000 loan to $1,585 from $1,462.

 

Source: Punch