WASHINGTON (AP) – Rates on 30-year mortgages rose for a third straight week, hitting the highest level in more than three months.
Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages averaged 6.24 percent this week, up from 6.04 percent last week.
That is the highest level since the week of Nov. 15 when 30-year rates also averaged 6.24 percent. It marked a significant reversal from the beginning of the year when 30-year rates dropped below 6 percent for six straight weeks reflecting a significant slowdown in the economy. That slowdown prompted the Federal Reserve to aggressively cut the short-term interest rate it controls by 1.25 percentage points in January, the biggest one-month cut in this rate by the Fed in more than a quarter-century.
While Federal Reserve Chairman Ben Bernanke again signaled during congressional testimony this week that the Fed was prepared to cut rates further in an effort to stave off a recession, investors have grown concerned about what inflation might do to their bond investments. The government has reported that consumer and wholesale inflation jumped sharply in January. The inflation worries have helped push up mortgage rates which are set in bond markets.
Frank Nothaft, chief economist at Freddie Freddie Mac, said the rise in mortgage rates would likely put a damper on the recent surge in mortgage refinancings.
During January, refinancings had hit a 12-month high as homeowners sought to take advantage of falling mortgage rates to lower their monthly payments.
In other rate moves this week, rates on 15-year mortgages, a popular choice for refinancing, rose to 5.72 percent, up from 5.64 percent last week. Rates on five-year adjustable-rate mortgages rose to 5.43 percent, up from 5.37 percent last week.
Rates on one-year ARMs climbed to 5.11 percent, compared to 4.98 percent last week.
The mortgage rates do not include add-on fees known as points. Thirty-year mortgages and 15-year mortgages both carried a nationwide average fee of 0.5 point. Five-year adjustable-rate mortgages had a fee of 0.4 point while one-year adjustable-rate mortgages carried an average fee of 0.7 point.
A year ago, 30-year mortgages stood at 6.18 percent, rates on 15-year mortgages were at 5.92 percent, five-year adjustable-rate mortgages averaged 5.93 percent and one-year ARMs were at 5.49 percent.
Housing has been suffering through a steep slump in sales and falling prices in many parts of the country over the past two years following a five-year boom which had pushed both sales and home prices to record levels.
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Freddie Mac: http://www.freddiemac.com
Copyright 2008 The Associated Press.