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The Boston Globe

Business

Mortgage rates reverse their rise

WASHINGTON — Average rates on fixed mortgages fell this week after last week’s surge. Freddie Mac said the average on the 30-year loan dropped to 4.29 percent from 4.46 percent last week, the highest in two years and a full point more than a month ago.

The average on the 15-year mortgage fell to 3.39 percent, down from 3.50 percent last week — the highest since August 2011.

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Mortgage rates jumped last week after the Federal Reserve signaled it could slow its monthly bond purchases later this year if the economy keeps improving. The bond purchases have kept long-term interest rates down, making mortgages and other consumer loans cheaper.

Mortgages are still low by historical standards. Low rates have helped fuel a housing recovery.

In May, completed sales of previously occupied homes surpassed the 5 million mark for the first time in 3½ years. Sales could rise further in June because the number of people who signed contracts to buy homes rose last month to the highest level since December 2006. There is generally a one- to two-month lag between a signed contract and a completed sale.

Greater demand, along with a tight supply of homes for sale, has driven up home prices. It has also led to more construction, which has created more jobs and contributed to economic growth.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of the week. The average does not include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage was 0.7 point this week, down from 0.8 last week. The fee for a 15-year loan was also 0.7 point, also down from 0.8 last week.

The average rate on a five-year adjustable mortgage was 3.10 percent, up slightly from 3.08 percent last week. The fee was 0.7 point, up from 0.5.

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