Mortgage Rates Inch Slightly Higher For Week

Rates on 30-year mortgages, after falling steadily for a month, edged up slightly this week but still remained well below the levels of a year ago, the Philadelphia Daily News reports.

Freddie Mac reported yesterday that 30-year, fixed-rate mortgages averaged 6.12 percent, up from 6.11 percent last week. Last week’s rate had been the lowest level this year except for the week of January 19, when the 30-year mortgage dipped to 6.10 percent. A year ago, the rate was 6.30 percent.

All mortgage rates except the five-year ARM showed tiny gains this week, which economists attributed to conflicting signals from the economy.

“Mixed economic reports have kept mortgage rates from making any drastic changes this week,” said Frank Nothaft, chief economist at Freddie Mac.

The nation’s biggest mortgage company said that the government reported stronger-than-expected job growth and retail sales for November but that wage growth and consumer sentiment were both weaker.

On Tuesday, the Federal Reserve voted as expected to keep interest rates unchanged at its final meeting of the year, as many expected.

Many economists believe the Federal Reserve, which last changed rates in June, will remain on hold until May or June 2007, as the U.S. Central bank hopes that the 17 rate hikes they already have approved will be enough to achieve a soft landing in which a slowing economy cools inflation without sparking a recession.

Nothaft predicted that long-term mortgage rates will rise in coming months but at a gradual pace. He said the 30-year home loan rate will most likely not reach 7 percent, with the moderate rates expected to help a rebound in the slumping housing market.

After five years in which sales of both new and existing homes climbed to successive highs, the housing market has cooled considerably this year. Sales have fallen and home builders have been scrambling to cut back on construction to deal with record levels of unsold homes.

• Rates on 15-year, fixed-rate mortgages averaged 5.86 percent this week, up from 5.84 percent last week.
• Rates for one-year ARMs edged up from 5.42 percent to 5.45 percent.
• The five-year ARM ended up holding steady at 5.92 percent.