Mortgage Rates Increase, Reach Eight-Month High

Rates on 30-year mortgages rose for a third straight week, reaching their highest level in more than eight months, Freddie Mac reported Thursday.

The government-backed agency found in its weekly mortgage lender survey that 30-year, fixed-rate mortgages averaged 6.42 percent over the past week.

That was an increase 6.37 percent last week and marks the highest point for 30-year mortgage rates - the industry’s benchmark home loan - since they averaged 6.43 the week of September 14.

Analysts attributed the increase to signs of economic strength outside of housing such as the April rise in orders for manufactured goods.

“Recent reports have indicated that economic growth outside of the housing market remains high with healthy consumer spending and improving business spending,” said Frank Nothaft, Freddie Mac chief economist.

The government reported Thursday that the overall economy, as measured by the gross domestic product, rose at a tepid 0.6 percent rate in the first three months of this year, the slowest pace in four years.

But analysts believe growth rebounded in the current quarter with expectations that the GDP is currently rising at a much healthier pace, despite the lagging housing and mortgage loan markets.

Rates on 15-year, fixed-rate home loans, a popular choice for mortgage refinance seekers, rose to 6.12 percent this week, up from 6.06 percent last week.

Five-year, adjustable-rate mortgages averaged 6.19 percent, up from 6.02 percent. One-year, adjustable mortgage loans were the only home mortgage type to show a decline, dipping to 5.57 percent from 5.64.

The mortgage rates quoted here do not include points.

Thirty-year and 15-year home loans each carried an average of 0.4 points, while five-year adjustable mortgages carried a fee of 0.5 points, and at the same time, one-year ARMs had a fee of 0.6 point.

• A year ago at this time, rates on 30-year mortgages stood at 6.67 percent - while 15-year home mortgage loans were at 6.26 percent.
• Five-year, adjustable-rate mortgages also averaged 6.26 percent and one-year ARMs were at 5.68 percent a year ago.

SOURCE: Washington Post