Positive economic news fueled the fourth consecutive week of rising mortgage rates, according to surveys conducted by Freddie Mac and Bankrate.com.
In Freddie Mac’s survey, the 30-year fixed-rate mortgage averaged 5.77 percent for the week ended today, up from last week when it averaged 5.73 percent. The average for the 15-year fixed-rate mortgage is 5.34 percent, up from last week when it averaged 5.32 percent. Points on both the 30- and 15-year averaged 0.5.
The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 5.27 percent this week, with an average 0.6 point, up slightly from last week when it averaged 5.26 percent. The one-year Treasury-indexed ARM averaged 4.46 percent, with an average 0.6 point, up from last week when it averaged 4.42 percent. The last time the one-year ARM was higher was the week ending July 19, 2002, when it averaged 4.5 percent.
“Although inching upwards, the average 30-year fixed-rate mortgage rate for the month of July was lower than the annual averages since our survey began in 1971,” said Frank Nothaft, vice president and chief economist at Freddie Mac. “And the most recent figures for housing sales are reflective of these low interest rates in the mortgage industry.
“Currently, we are experiencing a rather flat yield curve. As a result, ARMs mortgages will probably become less popular because the uncertainty of future monthly payments may outweigh the savings realized in the initial rate period.”
In Bankrate.com’s survey, mortgage rates increased slightly, rising for the fourth consecutive week. The average 30-year fixed-rate mortgage inched higher from 5.78 percent to 5.84 percent, according to Bankrate.com’s weekly national survey of large lenders. The 30-year fixed-rate mortgages in this week’s survey had an average of 0.38 discount and origination points.
The 15-year fixed-rate mortgage, popular for refinancing, increased from 5.39 percent to 5.45 percent. The average rate for the jumbo 30-year fixed-rate mortgage nudged higher from 6.01 percent to 6.03 percent. Adjustable-rate mortgages increased at a faster pace, with the average 5/1 adjustable-rate mortgage jumping from 5.4 percent to 5.49 percent, and the one-year ARM moving from 4.78 percent to 4.8 percent.
This monthlong rate rise is unusual because of what happened during the year previous, when the Fed kept raising short-term interest rates, but long-term rates fell. The prime rate went from 4 percent to 6 percent, while the average rate on a 30-year fixed mortgage dropped from 6.3 percent to 5.61 percent, according to Bankrate’s national survey.
The Fed didn’t want or expect long-term mortgage rates to drop while it was raising short-term rates. According to the conventional wisdom, long-term rates fell because the Fed’s rate increases were seen as anti-inflationary. Federal Reserve Board Chairman Alan Greenspan didn’t fully buy that theory, and he labeled the behavior of long-term rates a conundrum.
The following is a sampling of Bankrate’s average 30-year-mortgage interest rates this week in some U.S. metropolitan areas.
New York – 5.85 percent with 0.18 point
Los Angeles – 5.91 percent with 0.59 point
Chicago – 5.95 percent with 0.01 point
San Francisco – 5.92 percent with 0.34 point
Philadelphia – 5.7 percent with 0.44 point
Detroit – 5.86 percent with 0.25 point
Boston – 5.92 percent with 0.1 point
Houston – 5.78 percent with 0.75 point
Dallas – 5.83 percent with 0.59 point
Washington, D.C. – 5.7 percent with 0.55 point
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