Mortgage rates and bond yields both spiked in reaction to the U.S. Federal Reserve's announcement that it will begin tapering its bond purchases later this year, Freddie Mac announced Thursday.
The Primary Mortgage Market Survey showed that the average 30-year fixed-rate mortgage (FRM) jumped to 4.46 percent for the week ending June 27, compared with the 3.93 level the week before. This week's level is the highest the FRM has been since the week of July 28, 2011. It's also the largest weekly increase for the 30-year fixed since April 1987.
"Despite the recent gains in mortgage rates, homebuyer affordability remains strong for the typical family in most parts of the country," Freddie Mac said in a statement, adding that this strength should help keep the housing recovery going.
Freddie Mac said the 15-year FRM this week averaged 3.5 percent, up from last week's 3.04 percent. A year ago at this time, the 15-year FRM averaged 2.94 percent.
"Higher mortgage rates may dampen some housing market activity, but the effect will be muted by the high level of buyer affordability," said Frank Nothaft, vice president and chief economist at Freddie Mac, adding that home sales should remain strong.
Nothaft pointed out that existing home sales in May rose at their strongest pace since November 2009 and new home sales were the highest since July 2008.
"In addition, the 12-month growth in the S&P/Case-Shiller 20-city home price index for April, 12.1 percent, was the largest since April 2006," said Nothaft.
Freddie Mac surveys lenders each week on the rates, fees and points for the most popular mortgage products.