Mortgage rates rise to highest level in 2 months

Associated Press Feb. 16, 2006 12:11 PM

WASHINGTON - Rates on 30-year mortgages edged up for a fourth straight week, rising to the highest level in two months, Freddie Mac reported Thursday.

The giant mortgage company said its nationwide survey showed that rates on 30-year mortgages rose to 6.28 percent, up from 6.24 percent last week.

It was the fourth consecutive increase and left the 30-year mortgage at the highest level since it stood at 6.30 percent the week of Dec. 15. Rates on 30-year mortgages had dropped as low as 6.10 percent in mid-January before beginning their latest increase. Economists believe the path of mortgage rates this year will be heavily influenced by what the Federal Reserve does with the short-term interest rates that it controls.

New Federal Reserve Chairman Ben Bernanke in congressional testimony on Thursday left the door open for further rate hikes and many economists believe the Fed will raise rates at least once more at its March 28 meeting and possibly at a May 10 meeting as well.

Private economists are predicting that the 30-year mortgage by the end of this year will have risen to between 6.5 percent and 7 percent, enough to slow the booming housing market.
"So far this year, fixed-rate mortgages have risen only slightly," said Frank Nothaft, chief economist at Freddie Mac. "Long-term rates are only marginally higher than they were two months ago."

Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing a home mortgage, averaged 5.91 percent this week, up from 5.83 percent last week.
One-year adjustable rate mortgages increased to 5.36 percent this week, compared with 5.34 percent last week.

Rates on five-year hybrid adjustable rate mortgages rose to 5.95 percent this week, up from 5.89 percent last week.

The mortgages rates do not include add-on fees known as points. The one-year ARM carried a nationwide average fee of 0.7 point last week while the other three categories carried an average fee of 0.5 point.

A year ago, 30-year mortgages averaged 5.62 percent, 15-year mortgages stood at 5.14 percent, one-year adjustable-rate mortgages were at 4.15 percent and five-year hybrid adjustable rate mortgages averaged 5.05 percent.

Source: Arizona Republic / azcentral.com


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