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UPDATE 1-Rising rates seen hurting U.S. mortgage sector in 2017 -Freddie
December 15, 2016 / 8:11 PM / a year ago

UPDATE 1-Rising rates seen hurting U.S. mortgage sector in 2017 -Freddie

(Recasts first paragraph, adds quote)
    By Richard Leong
    NEW YORK, Dec 15 (Reuters) - The U.S. mortgage industry will
face a rough 2017 if home borrowing costs stay on their upward
trajectory, chief economist Sean Becketti at mortgage finance
agency Freddie Mac said on Thursday.
    The borrowing cost on 30-year fixed-rate mortgages, the most
widely held type of U.S. home loan, averaged 4.16 percent in the
week ended Dec. 15, the highest since 4.19 percent in the week
of Oct. 2, 2014, Freddie Mac said.    
    Last week, 30-year mortgage rates averaged 4.13 percent.  
    "If rates continue their upward trend, expect mortgage
activity to be significantly subdued in 2017," Becketti said in
a statement.       
    Mortgage rates have jumped in step with U.S. bond yields
following Donald Trump's presidential win on Nov. 8. His
surprise victory kindled a bond market selloff, propelling
benchmark yields to their highest levels in over two
years. 
    Traders have bet on possible tax cuts, federal spending,
looser regulations and stricter trade policies under a Trump
administration and a Republican-controlled U.S. Congress.
Collectively, the fiscal stimulus could result in faster
economic growth but also higher inflation, making bonds less
appealing.
    Since the U.S. election, 30-year mortgage rates have risen
over 0.60 percentage point as data showed the rate jump has
discouraged people seeking to buy a home or refinance one.
    The Mortgage Bankers Association on Wednesday said mortgage
application activity fell last week to its lowest level since
early January. {nL1N1E90P9]
   Below is a summary of Freddie Mac's average mortgage rates in
the week ended Dec. 15:
 Loan type      Latest week (pct)  Week ago (pct)  Year ago (pct)
 30-year fixed  4.16               4.13            3.97
 15-year fixed  3.37               3.36            3.22
 5-year ARM     3.19               3.17            3.03
    


    
 (Reporting by Richard Leong; Editing by Chizu Nomiyama and
Meredith Mazzilli)

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