Mortgage giant Freddie Mac said Thursday the average rate on a 30-year fixed-rate mortgage declined to 4 per cent this week from 4.04 per cent a week earlier. The rate on 15-year fixed-rate mortgages slipped to 3.23 per cent from 3.25 per cent.
Mortgage rates have been surging in recent weeks amid signs of improvement in the economy.
On Wednesday, the Federal Reserve took note of the economic strength and appeared ready to raise interest rates this year for the first time in nearly a decade, in the belief that the economy no longer needs the stimulus of near-zero rates.
The economic improvement and stronger employment picture has bolstered the housing market. In a recent indication, the government reported Tuesday that although U.S. builders broke ground on fewer homes in May, the pace of construction remains significantly higher than a year ago.
The recent increase in mortgage rates has come during the height of the spring home buying season. Still, mortgage rates remain low by historic standards. A year ago, the average 30-year rate was 4.17 per cent and the 15-year was 3.30 per cent.
To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 per cent of the loan amount.
The average fee for a 30-year mortgage rose to 0.7 point from 0.6 point last week. The fee for a 15-year loan fell to 0.5 point from 0.6 point.
The average rate on five-year adjustable-rate mortgages slipped to 3 per cent from 3.01 per cent; the fee was unchanged at 0.4 point. The average rate on one-year ARMs was steady at 2.53 per cent; the fee remained at 0.2 point.