Mortgage rates jumped to a three-month high yesterday, putting hopes for a rebound in the housing market and consumer spending at risk, the Wall Street Journal reports. The average 30-year fixed rate hit 5.44% from 5.29% the day before and 5.03% Tuesday. The rates make it tougher for homeowners to lower payments by refinancing, which in turn can hurt consumer spending.
“The spike in rates has the potential to derail a lot of things,” said a strategist. And mortgage delinquencies and defaults are rising with job losses. Some 5.7% of prime fixed-rate loans, 49% of subprime adjustable-rate loans, and a record 12.1% of first-lien home mortgages were past due or in foreclosure in late March.