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30-year mortgage rates near year’s high

Martin Crutsinger Associated Press

WASHINGTON – Rates on 30-year mortgages rose this week to the second-highest level of the year as financial markets reacted to stronger economic news.

Freddie Mac, the mortgage company, reported Thursday that 30-year fixed-rate mortgages averaged 6.73 percent this week. That was up from 6.63 percent last week and was very close to the high point of the year, which was 6.74 percent set the week of June 14. In the following three weeks, rates had edged down slightly.

The increase this week reflected a series of reports showing strong economic growth including a solid employment report in which the jobless rate held steady at 4.5 percent in June.

“A favorable employment report for June and robust consumer credit growth for May pushed long-term mortgage rates higher in the past week, nearly eliminating the declines made in rates over the previous three weeks,” said Frank Nothaft, chief economist for Freddie Mac.

Nothaft predicted that 30-year mortgages are likely to stay near the current level for the rest of the year.

At their last meeting, June 27-28, Federal Reserve policymakers decided to hold a key interest rate unchanged while noting that some readings on core inflation had improved. Many economists believe the Fed, which last changed rates a year ago, will keep that rate on hold for the rest of this year and into 2008.

According to the Freddie Mac survey, rates on 15-year fixed-rate mortgages, a popular choice for refinancing, rose to 6.39 percent this week, up from 6.30 percent last week. Rates on five-year adjustable-rate mortgages averaged 6.35 percent this week, up from 6.29 percent last week. Rates on one-year adjustable-rate mortgages remained at 5.71 percent this week, unchanged from last week.

The mortgage rates do not include add-on fees known as points. Both 30-year and 15-year mortgages carried a nationwide average fee of 0.4 point while five-year ARMs and one-year ARMs both carried an average fee of 0.5 point.

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