For the fourth straight week, the average mortgage rate has increased. According to Freddie Mac, the mortgage company, the average 30-year fixed rate mortgage is averaging 6.42%. That's the highest level since last September.
Read more after the jump about how inflation concerns is driving up the mortgage rates.
From the Associated Press:
WASHINGTON (AP) - 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.
