Mortgage rates continued their upward trend this week on comments by Federal Reserve Chairman Alan Greenspan that the economy is in a state of “vigorous expansion,” according to surveys conducted by mortgage buyer Freddie Mac and Bankrate.
In Freddie Mac’s weekly survey, the 30-year fixed-rate mortgage averaged 5.94 percent for the week ended today, up from last week when it averaged 5.89 percent. The average for the 15-year fixed-rate mortgage this week is 5.25 percent, up slightly from last week when it averaged 5.23 percent. Points on both the 30- and 15-year averaged 0.7.
One-year Treasury-indexed adjustable-rate mortgages averaged 3.69 percent this week, with an average 0.7 point, unchanged from last week.
“Although this past month’s dramatic rise in mortgage rates is consistent with an economic recovery, it will take more than one month of strong employment gains to verify this recovery is sustainable,” said Frank Nothaft, Freddie Mac chief economist. “The market is behaving as though the recovery is a fait accompli and has entered a volatile period of trying to outguess the Federal Reserve Board’s next move.
“Home purchase applications are still strong, according to the Mortgage Banker’s application survey, which also showed that refinancing fell off over the last four weeks, due almost entirely to higher mortgage rates.”
Mortgage rates increased for the fifth consecutive week, moving above the 6 percent mark for the first time since the week of Dec. 3, 2003, according to Bankrate.com’s weekly national survey of large lenders. The average 30-year fixed-rate mortgage increased from 5.97 percent to 6.06 percent in Bankrate’s survey. The mortgages in this week’s survey had an average of 0.38 discount and origination points. In the past five weeks, the average 30-year fixed-rate mortgage has increased from 5.41 percent to 6.06 percent.
The 15-year fixed-rate mortgage popular for refinancing climbed from 5.31 percent to 5.37 percent. The jumbo 30-year fixed-rate mortgage climbed 6 basis points to 6.23 percent and the one-year adjustable-rate mortgage increased by 7 basis points to 3.86 percent. A basis point is one one-hundredth of one percentage point.
Alan Greenspan’s testimony before the Senate Banking Committee and the Congressional Joint Economic Committee served notice to financial markets that interest rates are headed higher. Mortgage rates have trended higher in recent weeks in response to economic news indicating a strengthening labor market and brewing inflation pressures. But Greenspan’s comments dismissing the threat of deflation and that interest rates “must rise at some point” sustained the trend to higher rates. Bond investors continued to unwind their positions fearing higher interest rates and inflation, causing bond prices to fall and bond yields to rise. Mortgage rates are closely related to yields on long-term government bonds.
The following is a sampling of Bankrate’s average 30-year-mortgage interest rates this week in some U.S. metropolitan areas.
New York – 6.07 percent with 0.14 point
Los Angeles – 6.06 percent with 0.7 point
Chicago – 6.15 percent with 0.13 point
San Francisco – 6.13 percent with 0.49 point
Philadelphia – 6.05 percent with 0.22 point
Detroit – 5.97 percent with 0.49 point
Boston – 6.05 percent with 0.1 point
Houston – 6.1 percent with 0.51 point
Dallas – 6.03 percent with 0.58 point
Washington, D.C. – 5.97 percent with 0.48 point
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