WASHINGTON (AP) — Average U.S. rates on fixed mortgages rose this week in the wake of comments by Federal Reserve Chairman Janet Yellen suggesting that the Fed could start raising short-term interest rates by mid-2015.
Mortgage buyer Freddie Mac said Thursday the average rate for the 30-year loan increased to 4.40 percent from 4.32 percent last week. The average for the 15-year mortgage rose to 3.42 percent from 3.32 percent.
A key home-price index showed Tuesday a robust 13.2 percent increase in January compared with 12 months earlier. But the Standard & Poor's/Case-Shiller 20-city index was down from a 13.4 percent increase in 2013 and was the second straight decline.
There have been signs recently that the home-sales market could pick up in the coming months.
Most economists expect sales to rebound as the weather improves and the spring buying season begins. Not only does warmer weather bring more traffic to open houses, but families are usually reluctant to move in the middle of the school year.
Mortgage rates have risen about a full percentage point since hitting record lows roughly a year ago.
The increase was driven by speculation that the Federal Reserve would reduce its $85 billion-a-month bond purchases, which have helped keep long-term interest rates low. Indeed, the Fed has announced three $10 billion declines in its monthly bond purchases since December. The latest plan is to cut its monthly long-term bond purchases to $55 billion because it thinks the economy is steadily healing.