NEW YORK (
) -- Mortgage rates are up for the fourth week in a row, and that has inquiring minds asking one big question:
Is the most attractive interest rate environment in history coming to an end?"
from Freddie Mac reveal that 30-year fixed mortgage interest rates are still well under 4%, at 3.66% last week.
BankingMyWay Weekly Mortgage Tracker
has the average 30-year rate at 3.75% this week.
Nevertheless, this is a trend that has economists taking a closer look.
Freddie not only says fixed-mortgage rates are up for the fourth straight week, the mortgage giant also says that the rate of new single-family home construction is at a five-month low. That means less new homes on the market, with higher rates on the ones that are available for homebuyers.
"Fixed mortgage rates inched upward this week along with other long-term yields," says Frank Nothaft, chief economist at Freddie Mac.
Freddie Mac noted Census Bureau data showing residential building permits moving up in July, although builders slowed the pace of construction starts on one-family homes in July to the least since March.
Apartment and condominium building picked up to the most since April.
Existing home sales rose in July from June's eight-month low and the median sales price jumped 9.4% from a year earlier, representing the largest 12-month gain since January 2006. The price gain was broad-based, with annual increases registered in all four regions of the U.S. and led by a 24.5% increase in the Western U.S.
What's driving interest rates up? Here are three significant triggers:
1. Treasury bond yields are up
As Nothaft notes, bond yields are up of late, with 10-year U.S. Treasury notes yielding 1.68% in the past week, up from 1.5% at the beginning of August. While these rates are relatively low in a historical sense, mortgage rates do track the direction of Treasury rates, and right now, those rates are moving upward.
2. Housing data has improved
Freddie Mac also notes that existing home sales are climbing, after months of soft sales activity. In addition, the median home sales price has risen 9.4% from July 2011 to July 2012. In general, the healthier the housing market, the more interest mortgage lenders charge for home loans.
3. A quiet Eurozone
For months, economists (and some real estate agents) were wringing their hands over the sovereign debt crisis in Europe. Financial troubles in Greece, Italy, Portugal and other European countries sent tremors across the globe, causing anxiety among financial markets, and among mortgage lenders, who feared a major global financial crisis. But in August, at least, Eurozone debt has held less sway in media headlines and in the market, and the relative quiet across the pond has been good for the global economy.
In reverse, rising mortgage rates likely had an economic impact. The Mortgage Bankers Association
that U.S. mortgage applications fell by 7.4% for the week ending August 17, 2012.
A decline in mortgage applications at a time when mortgage rates are climbing may be a coincidence, but that's unlikely. Historically, when homebuyers sense mortgage rates are higher (thus making homes more expensive), they're less likely to try and land a mortgage.
A one-month snapshot does not a housing market make. But the last 30 days have seen a steady hike in mortgage rates.
If that continues in September, then it's a trend, and could be a big one.
--By Brian O'Connell
More on housing:
break even on your home
Don't point finger at
without running numbers
housing recovery underway?
and become a fan on