Mortgage Rates Up Slightly; More Drastic Movement May Come Soon

U.S. mortgage loans got slightly more expensive over the past week, according to Freddie Mac’s survey released on Thursday.

But experts believe mortgage rates could experience more movement over the coming week as a few key indicators for the housing market and the economy are released, said Freddie Mac’s chief economist.

The 30-year fixed-rate mortgage averaged 6.30 percent for the week ending February 15, up from last week’s average of 6.28 percent, according to the survey of the nation’s mortgage lenders.

The industry’s benchmark mortgage also averaged 6.28 percent a year ago.

The 15-year fixed-rate mortgage averaged 6.03 percent, up from last week’s 6.02 percent average. The mortgage rates averaged 5.91 percent a year ago.

Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 6.01 percent for the week, up from last week’s 5.99 percent average. The ARM averaged 5.95 percent a year ago.

The one-year Treasury indexed ARM averaged 5.52 percent, up from last week’s 5.49 percent average. The ARM averaged 5.36 percent a year ago.

To obtain the mortgage rates quoted above, the 30- and 15-year fixed-rate mortgages required the payment of an average 0.4 points, while the 5-year ARMs required an average of 0.5 points and the 1-year ARMs saw an average of 0.6 points paid.

A point is 1 percent of the home loan amount, charged as prepaid interest.
The mortgage rates showed only small changes during the week because there was relatively little new information that would prompt them to move, said Frank Nothaft, Freddie Mac chief economist.

January’s retail sales were virtually unchanged from December’s level. Furthermore, Fed Chairman Bernanke testified before the Senate committee and forecasted a positive outlook for the economy, which he feels is likely to expand moderately this year and next with gradual easing in core inflation.

Next week, January housing starts, along with the producer price index and the consumer price index, will be released, and those comprise the first indicators of the housing market and inflation in early 2007, experts say.

In response, mortgage rates could move more suddenly.

In a separate survey released by the Mortgage Bankers Association on Wednesday, the volume of mortgage applications increased a seasonally adjusted 1.5 percent in the week ending February 9.

Applications for home purchase loans and mortgage refinancing loans were up 10.9 percent compared with the same week in 2006. The MBA survey covers about half of all U.S. retail residential mortgage originations.

SOURCE: MarketWatch