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Rates on 30-year mortgages rise after Fed action
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Half the economists polled by this week by Bankrate.com believe mortgage
rates will continue going up over the next 30 to 45 days, while the
other half expect little change. None predicted a mortgage rate decline. |
WASHINGTON (AP) -- March 31, 2006 -- Rates on 30-year mortgages rose this week
after the Federal Reserve pushed a key short-term rate up for the 15th time and
indicated that more rate increases were possible.
Mortgage giant
Freddie Mac reported Thursday that rates on 30-year, fixed-rate mortgages averaged
6.35 percent this week, up from 6.32 percent last week.
The increase pushed
rates to the highest level since they hit a 2 1/2-year high of 6.37 percent the
week of March 9.
Analysts attributed
the increase to the Fed's decision on Tuesday to raise the federal funds rate, the
interest that banks charge each other, to a five-year high of 4.75 percent while
indicating that further rate hikes were possible.
"The market was a
little surprised at the (Fed's) comments which implied more tightening in the
future," said Frank Nothaft, chief economist for Freddie Mac.
"That raised the
expectation that inflation may be more of a threat than was previously thought,
and that kind of thinking promotes upward pressure on mortgage rates like we saw
across the board this week," Nothaft said.
Rising mortgage
rates are expected to cool off the extended boom in housing that saw sales of both
new and existing homes set records for five consecutive years. Analysts are
looking for sales to drop by around 6 percent this year.
Rates on 15-year,
fixed-rate mortgages, a popular choice for refinancing a home mortgage, averaged
6.00 percent this week, up from 5.97 percent last week.
One-year adjustable
rate mortgages rose to 5.51 percent, up from 5.41 percent last week.
Rates on five-year
hybrid adjustable rate mortgages also rose, climbing to 6.02 percent, up from 5.96
percent last week.
The mortgage rates
do not include add-on fees known as points. The 30-year and 15-year mortgages
carried an average nationwide fee of 0.5 point while the one-year ARM had a fee of
0.8 point and the five-year ARM carried an average fee of 0.6 point.
A year ago, 30-year
mortgages averaged 6.04 percent, 15-year mortgages stood at 5.58 percent, one-year
adjustable-rate mortgages were at 4.33 percent and five-year hybrid adjustable
rate mortgages averaged 5.43 percent.
On the Net: Freddie Mac:
Copyright 2006
Associated Press, Martin Crutsinger (AP Economics Writer). All rights reserved.
This material may not be published, broadcast, rewritten, or redistributed.
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