Mortgage Rates Creep Upward, Hit Four-Month High

Lukewarm inflation and strong economic growth propelled mortgage interest rates to their highest level in more than three months, a national survey found Thursday.

The 30-year, fixed-rate mortgage climbed to an average of 6.34 percent in the week ended February 1, up from 6.25 percent the week ending January 25, the mortgage company Freddie Mac reported.

That marked its highest point since October 26, when mortgage rates averaged 6.4 percent. At this time last year, the 30-year home loan rate averaged 6.23 percent.

The long-term rate carried an average fee of 0.4 points.

For the 15-year, fixed-rate mortgage, the average leaped to 6.06 percent from 5.98 percent in the same one-week period. The last time the 15-year rate was near that level was October 26, when it averaged 6.1 percent.

A year ago, the 15-year mortgage rates averaged 5.81 percent. This week’s 15-year home loan rates also carried an average fee of 0.4 points.

Frank Nothaft, chief economist for Freddie Mac, said that home mortgage loan costs moved higher following recent upbeat economic news, including strong 3.5 percent annual growth in the economy over the final quarter of 2006. He said that occurred while inflation moderated.

Short-term, adjustable-rate mortgages were also higher in the period. The five-year hybrid ARM rose to 6.04 percent from 6 percent. The five-year rate had an average fee of 0.6 points. A year earlier, the five-year rate averaged 5.87 percent.

The one-year adjustable-rate mortgage also increased to 5.54 percent from 5.49 percent, with an average fee of 0.7 point. Last year at this time, the one-year rate averaged 5.33 percent, Freddie Mac reported.

Meanwhile, mortgage applications for domestic home loans have been on the rise, according to a report released earlier this week.

The Market Composite Index, which measures home loan application volume, was up 3.2 percent to a reading of 631.3 in the week ended January 26 from 611.3 in the previous week.

The Mortgage Bankers Association’s mortgage refinance index increased by about 5 percent over the past week. At the same time, the adjustable-rate share climbed to 21.4 percent from 20.3 percent.

Nothaft said that by and large, a mortgage lender is seeing two types of customers: those who are looking for an investment property and “move-up” home buyers. The latter are people who are selling their existing home and purchasing a more expensive residence.