March 14, 2008 in Business

Mortgage rates rise

The Associated Press The Spokesman-Review
 

WASHINGTON – Rates on 30-year mortgages increased this week for the fourth time in the past five weeks.

Freddie Mac, the mortgage company, reported Thursday that 30-year fixed-rate mortgages averaged 6.13 percent this week, up from 6.03 percent last week.

Rates on 30-year mortgages dropped below the 6 percent threshold in the second week of January and stayed there for six straight weeks as the economic slowdown stirred concerns about a possible recession.

However, in the past month, bond markets have grown worried about rising inflation pressures that are coming as the economy slows. Bond investors watch for any hints that inflation pressures could be increasing since higher inflation erodes the value of their fixed-rate bonds.

The 6.13 percent reading on 30-year mortgages was the highest level since they averaged 6.24 percent two weeks ago. It marked the fourth straight week that 30-year mortgages have been above 6 percent.

Even with the increase over the past month, housing analysts said mortgage rates remain at attractive levels that should be enough to help the housing industry emerge from its biggest slump in more than two decades.

All categories of mortgages showed declines this week.

Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing, rose to 5.60 percent this week, up from 5.47 percent last week.

For five-year adjustable-rate mortgages, rates rose to 5.58 percent, compared with 5.34 percent last week. And, rates on one-year adjustable-rate mortgages averaged 5.14 percent this week, up from 4.94 percent last week.

The mortgage rates do not include add-on fees known as points.

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