Mortgage Rates Up Again; Highest Since August

Home mortgage rates shot up across the nation for the fourth consecutive week, reaching their highest level since since last summer, according to a weekly survey released by Freddie Mac Thursday.

Average mortgage rates on 30-year home loans increased to 6.53 percent from 6.42 percent the previous week. The last time they were higher was the week of August 10, when they averaged 6.55 percent.

Rates on 15-year mortgages - a popular mortgage refinancing option - soared to 6.22 percent from 6.12 percent, hitting their highest mark since 6.20 percent that same week last August.

With such growth, mortgage rates on 30-year and 15-year home loans edged close to their year-ago levels.

A year ago this week, 30-year mortgages averaged 6.62 percent and 15-year home mortgage loans averaged 6.23 percent.

This week, one-year adjustable rate mortgages (ARM) averaged 5.65 percent up from 5.63 percent last year and from 5.57 percent a week earlier.

America’s home mortgage loan rates rose following last week’s government report on employment, which sparked inflation fears and lowered investors’ expectations for a interest rate cut from the Fed - and a subsequent home loan rate cut from most lenders.

“May’s unemployment rate remained at the second-lowest level since May 2001 while average hourly earnings rose. Additionally, labor costs are up 1.8 percent over the first three months of the year, tripling the original estimate, and fueling inflation fears,” said Frank Nothaft, Freddie Mac V.P. and chief economist, in a statement.

A mortgage lender charged an average of 0.4 points on 30- and 15-year home loans, with a point usually representing 1 percent of the loan amount.

The average points have remained at that level since they were 0.4 percent in the week ending May 17. Fees on the one-year ARM averaged 0.7 percent, up from 0.6 percent one week prior.

The “5/1″ ARM, set at a fixed rate for five years and then adjustable each following year after that, averaged 6.24, up from 6.19 percent last week.

Fees and points charged on the hybrid ARM products averaged 0.6, also up from the 0.5 percent averaged a week ago today.

Freddie Mac is a mortgage company chartered by Congress that buys home loans from lenders and packages them into securities to sell to investors, or hold onto in its own portfolio.

SOURCE: Reuters