Mortgage rates at highest level in 9 months
Freddie Mac reports 30-year fixed rate averaged 6.42 percent this week
updated 9:31 a.m. PT, Thurs., June. 19, 2008 from the Associated Press, posted on MSNBC.com
WASHINGTON – Rates on 30-year mortgages kept surging this week, rising to the highest level in nearly nine months, reflecting more concerns about what the Federal Reserve will do to combat a growing inflation threat.
Freddie Mac, the mortgage company, reported Thursday that 30-year fixed-rate mortgages averaged 6.42 percent this week. That was up sharply from 6.32 percent last week.
It was the highest level for 30-year mortgages since they averaged 6.42 percent for the week of Sept. 27 and marked the fourth straight week that they have been above 6 percent.
Frank Nothaft, chief economist at Freddie Mac, said the increased concerns about inflation were fueled by reports in the past week showing that both consumer prices and wholesale prices rose by significant amounts in May. This spurred further increases in the futures market where investors place bets on future Fed actions. That market is pointing to a Fed rate increase in September.
In a speech earlier this month, Federal Reserve Chairman Ben Bernanke signaled deepening worries about inflation and said the Fed would “strongly resist” any tendency for Americans’ expectations about price increases to become unsettled.
From last September through April, the central bank aggressively cut rates to try to keep the economy from falling into a recession, but now the Fed’s focus has shifted to worries about inflation.
Other types of mortgages showed increases this week, according to the Freddie Mac survey.
Rates on 15-year fixed-rate mortgages rose to 6.02 percent, up from 5.93 percent last week.
The five-year adjustable-rate mortgage rose to 5.89 percent, up from 5.70 percent last week. The rate on a one-year adjustable-rate mortgage rose to 5.19 percent, compared to 5.09 percent last week.
The housing market is facing numerous headwinds — from slumping prices to rising mortgage defaults that are dumping more homes on an already glutted market.
The mortgage rates do not include add-on fees known as points. The nationwide fee for 30-year and 15-year mortgages averaged 0.7 point. The fee on five-year and one-year mortgages averaged 0.6 point.
A year ago, rates on 30-year mortgages stood at 6.42 percent, 15-year mortgage rates averaged 6.08 percent, five-year adjustable-rate mortgages were at 5.90 percent and one-year adjustable-rate mortgages averaged 5.66 percent.
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