By Kenneth R. Gosselin
Second, an improving economy is pushing mortgage rates higher. Home loan rates move in lock step with the yield on 10-year U.S. treasuries. Last Friday, the yield rose nearly a quarter of a percentage point, to 2.74 percent. That was the biggest jump since August 2011.
The yield, or investment return, rises in a strengthening economy because the government must offer a higher return to attract investors who might want to move money to something potentially more profitable, such as the stock market.
Friday’s uptick in the yield came after the federal government reported that the nation’s employers added 195,000 jobs, well above the 165,000 expected by analysts. The nation’s jobless rate remained at 7.6 percent as more jobless workers entered the labor force and offset the increase in employment. That might be a sign that more people are optimistic about getting a job.
There is one upside to rising rates: Dismally low rates on savings accounts and certificates of deposit also could rise.
“If this is going to stick, we should see other rates go up as well,” Neilson said.
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