February 29, 2008 in Business

Mortgage rates still on the rise

Associated Press The Spokesman-Review

WASHINGTON – Rates on 30-year mortgages rose for a third straight week, hitting the highest level in more than three months.

Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages averaged 6.24 percent this week, up from 6.04 percent last week.

That is the highest level since the week of Nov. 15, when 30-year rates also averaged 6.24 percent. It marked a significant reversal from the beginning of the year, when 30-year rates dropped below 6 percent for six straight weeks, reflecting a significant slowdown in the economy. That slowdown prompted the Federal Reserve to aggressively cut the short-term interest rate it controls by 1.25 percentage points in January, the biggest one-month cut in this rate by the Fed in more than a quarter-century.

While Federal Reserve Chairman Ben Bernanke again signaled during congressional testimony this week that the Fed was prepared to cut rates further in an effort to stave off a recession, investors have grown concerned about what inflation might do to their bond investments. The inflation worries have helped push up mortgage rates, which are set in bond markets.

During January, refinancings had hit a 12-month high as homeowners sought to take advantage of falling mortgage rates to lower their monthly payments.

In other rate moves this week, rates on 15-year mortgages, a popular choice for refinancing, rose to 5.72 percent, up from 5.64 percent last week. Rates on five-year adjustable-rate mortgages rose to 5.43 percent, up from 5.37 percent last week.

Rates on one-year ARMs climbed to 5.11 percent, from 4.98 percent last week.

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