Mortgage Rates Up Sharply For Week
Average mortgage interest rates on 30-year home loans rose in the latest week to their highest since late October 2006, according to the weekly market survey from Freddie Mac.
The mortgage giant reports that 30-year home loans - the industry’s benchmark home mortgage product - averaged 6.37 percent, up significantly from 6.21 percent a week ago, and the highest since they hit 6.40 percent the week of last October 26.
At the same time, 15-year mortgages, always a popular mortgage refinancing option - averaged 6.06 percent, the first time they’ve risen above the 6 percent threshold since mid-February.
Last week, 15-year mortgage loans averaged 5.92 percent.
One-year adjustable rate mortgages (ARM), meanwhile, averaged 5.64 percent, also up substantially from 5.48 percent a week earlier.
A year ago, 30-year mortgage loan rates averaged 6.62 percent across America, while 15-year mortgages were 6.23 percent and one-year ARMs 5.61 percent.
“Stronger than expected consumer confidence and comments from members of the Federal Reserve raised some inflation concerns in the market, causing it to lower expectations of a Fed rate cut this year. This helped push mortgage rates higher this week,” said Frank Nothaft, Freddie Mac vice president and chief economist.
“We expect a gradual rise in mortgage rates over the remainder of the year with sales slipping in the second half of the year. A recovery returns toward the end of 2007 with modest increases in sales and construction during 2008,” Nothaft said.
In a sign that the market may be bouncing back a bit sooner than anticipated, the Commerce Department earlier Thursday said U.S. single-family home sales for April surged 16.2 percent to an annualized rate of 981,000 units.
The increase was the largest since a 16.4 percent jump in April 1993.
On Friday, the National Association of Realtors will release its U.S. April existing home sales data, which doesn’t figure to bode well in many of the housing markets that have been seeing declines.
Freddie Mac said that a mortgage lender charged an average of 0.4 percent in fees and points on 30- and 15-year mortgages, unchanged from last week. Fees on one-year ARMs averaged 0.6 percent, down from 0.7.
The “5/1″ ARM, set at a fixed rate for five years and adjustable each year after that, averaged 6.02 percent, up from 5.92 percent last week.
Fees and points charged by a home loan lender on the hybrid ARM averaged 0.5 percent, unchanged from the previous week.
Freddie Mac is a mortgage company chartered by Congress that buys mortgages from home loan lenders, packaging them into securities, which it then sells to investors or holds in its portfolio.
SOURCE: Reuters