Mortgage rates rise after Fed action

WASHINGTON — 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.

Rates on five-year hybrid adjustable rate mortgages also rose, climbing to 6.02 percent, up from 5.96 percent last week.