Mortgage rates rose again this week, partly because of worries over potential Federal Reserve increases. Freddie Mac reported in its weekly report that rates on 30-year, fixed-rate mortgages averaged 6.67%. The rate marked the highest rate since the week ended June 13, 2002, when 30-year fixed rates were at 6.71%. Fifteen-year, fixed-rate mortgages rose this week to 6.26%, up from 6.23% the week earlier. The 15-year is a popular choice for those refinancing a home mortgage. The rates on one-year, adjustable-rate mortgages hit the highest level in five years at 5.68%. They were last that high in mid-August 2001, when they averaged 5.71%. The rates on five-year, adjustable-rate averaged 6.26%, up from 6.21% the week earlier. Housing is showing many signs of slowing after five years of record sales. On Thursday, the National Association of Realtors reported that its index for pending home sales fell for the third month in a row. A separate government report showed a 1.1% drop in residential construction spending for April. This is the largest drop in over two years. Frank E. Nothaft, chief economist for Freddie Mac, says there is no reason to panic. He believes that rates will go "slightly higher" and that the increase will be "gradual and orderly." The same week one year ago, 30-year mortgages averaged 5.62%, 15-year mortgages were at 5.20% and one-year ARMs were at 4.26%. Five-year ARMs averaged 5.10% one year ago this week. Nothaft easily explained this week's increase in mortgage rates. "The Fed released the minutes of its most recent FOMC meeting, which showed that some members were concerned about inflationary pressure. This caused the bond market yields to rise, and brought about market speculation that the Fed may hike rates sooner than had been expected. All this combined to nudge rates up again this week." |
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