Average 30-year mortgage rate up to 4.46%

Ben Mitchell | USA TODAY

U.S. mortgage rates surged this week, reaching their highest level in two years and threatening to slow the housing industry's steady recovery.

Mortgage buyer Freddie Mac said Thursday that the average rate on the 30-year fixed loan jumped to 4.46% this week, the highest level since June 2011. That's up from 3.93% from the previous week.

It was the largest weekly increase in the 30-year rate since April 1987, Freddie Mac said.

The average rate on the 15-year mortgage jumped to 3.50% from 3.04%. That's the highest since August 2011. A year ago, the rate on the 15-year mortgage was at 2.94%.

The increases follow rising yields on the 10-year Treasury bond in the wake of Federal Reserve Chairman Ben Bernanke's comments last week that the Fed could start trimming its stimulus policies later this year if the economy continues to improve. Mortgage rates track the 10-year Treasury rate, which is at a two-year high.

Higher rates caused mortgage applications to fall 3% from last week, according to the Mortgage Bankers Association. Refinancing applications also fell to their lowest level since late 2011. But the purchasing index increased 2% and is up 16% from a year ago, according to the MBA.

"Higher mortgage rates may dampen some housing market activity but the effect will be muted by the high level of buyer affordability, and home sales should remain strong," said Freddie Mac chief economist Frank Nothaft.

Mortgage rates remain low by historical standards. But their sudden jump could make home buying more expensive with each passing week.

A buyer taking out a $200,000 mortgage at a 3.35% rate would pay $881 a month, according to Bankrate.com. The monthly mortgage payment jumps to $1,008 a month at a rate of 4.46%. That's an increase of $127 a month, which over 30 years adds $45,720 to the cost of the loan. The figures don't include taxes and insurance.

Patrick Newport, an economist at IHS Global Insight, doesn't see the rise in mortgage rates dampening the housing market over the long term.

"We will probably see some impact. … Any time the price of something goes up, people buy it," Newport said. "But demand for housing is so strong right now. Higher mortgage rates won't do much to slow down the housing market."

Rates remain historically low, he noted, and there's still pent-up demand for houses after several years of depressed construction and a limited number of homes for sale.

A more pressing problem than higher rates is the availability of credit for home borrowers, Newport said. The biggest barrier for many homebuyers has been difficulty obtaining a mortgage. Banks have tightened lending standards since the financial crisis erupted in 2008.

According to Freddie Mac's survey, the average fee for 30-year mortgages held steady this week at 0.8 percentage point. The fee for 15-year loans rose to 0.8 point from 0.7 percentage point.

The average rate on a one-year adjustable-rate mortgage increased to 2.66% from 2.57%. The fee for one-year adjustable-rate loans rose to 0.5 point from 0.4 point.

The average rate on a five-year adjustable-rate mortgage rose to 3.08% from 2.79% The fee rose to 0.7 point from 0.5 point.

Contributing: Associated Press