Long-term mortgage rates moved higher this week on brighter economic news, Freddie Mac reported today.
The average rate on 30-year fixed loans edged up from 5.85 percent to 5.88 percent, and the 15-year average climbed from 5.34 percent to 5.42 percent. By contrast, a year ago the 30-year averaged 6.17 percent and the 15-year averaged 5.87 percent.
To qualify for these rates, borrowers must pay points, or fees that lenders charge for loan processing expressed as a percent of the loan, which this week averaged 0.5 on the 30- and 15-year loans.
"While prime, conforming rates still remain at historically low levels, long-term mortgage rates did drift slightly upwards this week on signs that the economy may have a little more strength than what financial markets forecasted," Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement. "For instance, consumer spending in the fourth quarter of 2007 was revised upwards in the final estimate of gross domestic product. More recently, February’s personal income growth was the strongest since July 2007, and the ISM manufacturing index rose unexpectedly in March. Strong economic growth can lead to an uptick in inflation fears, which tends to place upward pressure on mortgage rates; however, fears of economic recession, too, are putting pressure on the markets.
"Housing, however, still continues to be a drag on the economy. In 2007, residential fixed investment shaved nearly a full percentage point off of GDP, the most since 1980. In February, median existing-house prices (excluding condominiums and co-ops) were 16 percent below the peak in June 2007 and median new-home prices were 7 percent below the record set in March 2007. Moreover, new construction of one-family homes was 61.5 percent below its all-time recent peak in January 2006."
Average rates on adjustable-rate mortgages (ARMs) fell in the latest survey, with the five-year Treasury-indexed hybrid ARM sinking from 5.67 percent to 5.59 percent and the one-year Treasury-indexed ARM falling from 5.24 percent to 5.19 percent. Points paid on these loans averaged 0.6 and 0.5, respectively.
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