Mortgage rates rose slightly this week on news the economy will continue to grow this year, according to surveys conducted by Freddie Mac and Bankrate.com.
In Freddie Mac’s survey, the 30-year fixed-rate mortgage edged up to an average 6.3 percent from last week’s 6.28 percent, while the 15-year fixed-rate mortgage increased from 6.02 percent to 6.03 percent. Points, which are fees lenders charge for loan processing expressed as a percent of the loan, averaged 0.4 on the 30- and 15-year loans.
“Mortgage interest rates exhibited little change in the past week, according to our weekly Primary Mortgage Market Survey, as there was little new information that would cause any great change,” said Frank Nothaft, Freddie Mac vice president and chief economist. “For example, January’s retail sales were virtually unchanged from December’s level. Further, Fed Chairman Bernanke testified before the Senate committee and forecasted that the economy seemed likely to expand at a moderate pace this year and next with gradual easing in core inflation.”
Adjustable-rate mortgages (ARMs) also posted gains this week, with the 5-year Treasury-indexed hybrid ARM rising to 6.01 percent and the 1-year Treasury-indexed ARM growing to 5.52 percent. Points averaged 0.5 on the 5-year and 0.6 on the 1-year loans.
Nothaft said “the first indicators of the housing market and inflation in early 2007” will be released in the coming week — January’s housing starts, producer price index and consumer price index — “and we could see interest rates move in response.”
In Bankrate.com’s survey, mortgage rates showed little movement this week, with the average 30-year fixed mortgage rate inching higher to 6.32 percent. Discount and origination points on these loans averaged 0.33.
The average 15-year fixed-rate mortgage popular for refinancing nosed up to 6.09 percent, according to Bankrate.com. On larger loans, the average jumbo 30-year fixed rate remained at 6.48 percent. For adjustable-rate mortgages, the average 5/1 ARM ticked higher to 6.18 percent and the average one-year ARM held at 6.04 percent.
In a week devoid of any significant economic news, much of the week was spent anticipating Fed Chairman Ben Bernanke’s congressional testimony about the economy, Bankrate.com reported. Bernanke voiced confidence that the economy would continue to expand and that inflation would moderate even further. If investors see continued evidence that inflation is cooperating, this could be good news for mortgage rates, which are closely related to yields on government and mortgage-backed bonds, and lower inflation translates into lower yields.
Bankrate.com said fixed mortgage rates are now considerably lower than last summer when the Fed last raised interest rates. At the time, the average 30-year fixed mortgage rate was 6.93 percent, and a $165,000 loan carried a monthly payment $1,090. With the average 30-year fixed rate now 6.32 percent, the same loan originated today would carry a monthly payment of $1,023, which is a compelling refinance alternative for adjustable-rate borrowers facing sharp payment adjustments.
The following is a sampling of Bankrate.com’s average 30-year-mortgage interest rates this week in some U.S. metropolitan areas:
New York – 6.28 percent with 0.13 point
Los Angeles – 6.37 percent with 0.48 point
Chicago – 6.45 percent with 0.02 point
San Francisco – 6.2 percent with 0.72 point
Philadelphia – 6.34 percent with 0.28 point
Detroit – 6.35 percent with no points
Boston – 6.44 percent with 0.05 point
Houston – 6.3 percent with 0.53 point
Dallas – 6.21 percent with 0.55 point
Washington, D.C. – 6.23 percent with 0.51 point
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