Mortgage Rates Move Higher For Week

After weeks of slowly easing, average rates on 30-year mortgage loans shot up to an average of 6.22 percent in the week ending Thursday, according to a weekly survey released by government-backed finance company Freddie Mac.

Last week, the mortgage rates averaged 6.17 percent.

The last time they hit 6.22 percent was February 22. Rates on 15-year home mortgages also rose to 5.90 percent from 5.87 percent, while one-year ARMs averaged 5.47 percent, compared to 5.44 percent last week.

Despite the increase, the costs of mortgages were still well below their year-ago levels, when 30-year home mortgages averaged 6.49 percent, 15-years were 6.14 percent, and the one year ARM was 5.61 percent.

The interest rates on mortgages may be going up, but on Wednesday the National Association of Realtors said home prices were going down.

The trade group forecasts the median price of an existing home will tumble 0.7 percent this year to $220,300, the first time in nearly four decades that it has forecast an annual decline.

Home mortgage lending has fallen quickly into a crisis as “subprime” (bad credit mortgage loan) borrowers with poor or suspect credit have registered higher delinquencies and foreclosures in recent months.

But Frank Nothaft, Freddie Mac V.P. and chief economist, said the interest rate rise was related to data released last week showing the country had stronger job growth in March than markets anticipated.

He also said mortgage refinancing activity has remained strong across the board, with 40 percent of total mortgage applications allocated for refinancing.

“Among those choosing to refinance now, a large share are doing so to avoid an adjustment to their monthly payment as the initial period on their adjustable-rate loan expires or to extract home equity through a cash-out refi,” he said.

Freddie Mac said lenders charged an average of 0.4 percent in points on 30-year mortgages, the same as last week, and an average of 0.4 percent on 15-year home loans, down from 0.5 percent last week. Fees on the one-year ARM dropped to 0.5 percent from last week’s 0.6 percent.

The “5/1″ ARM, set at a fixed interest rate for five years and adjustable each year thereafter, nudged higher to 5.93 percent from 5.92 percent last week. The points charged on the hybrid mortgage averaged 0.5 percent, down from 0.6 percent.

SOURCE: Reuters