Mortgage rates rise to highest level in three decades

Mortgage rates rise to highest level in three decadesThe latest data showed that the mortgage rates in the US rose to its highest level in a period of three decades on concerns that the Federal Reserve will soon begin rolling back to stimulus package for the US economy.

The mortgage rates have been rising since May and have now touched to 4.46 per cent this week, rising above the 4 per cent mark for the first time since March 2012. The average of a 30-year fixed home loan rose from 3.93 per cent to 4.46 per cent, recording its biggest increase in the Freddie Mac survey since 1987 due to concerns that the US Federal Reserve is set to roll back its stimulus package.

The Federal Reserve officials are trying to calm the situation by convincing investors that the Federal Reserve will not suddenly withdraw stimulus package that has helped the US economy survive the financial crisis by keeping the borrowing costs low. The reserve will continue to provide stimulus to support the recovery of the economy but has indicated that it will begin a gradual roll back.

The Freddie Mac's latest survey of lenders showed that the average rate for a 30-year fixed home loan had rose to 4.46 per cent during the previous week while the benchmark 30-year rate is up more than 1 percentage point. Experts have said that the rise will smoother a long boom in mortgage refinancing and control rising prices.