Sunday, March 20, 2005

Mortgage rates rise again - signaling a cooling market

Associated Press

WASHINGTON - Rates on 30-year mortgages climbed last week to their highest level in seven months, a trend that is expected to slow - but not stifle - the nation's housing market.

Mortgage giant Freddie Mac, in its weekly survey of mortgage rates across the country, reported that rates on 30-year, fixed-rate mortgages averaged 5.95 percent for the week ending March 17.

The rate was up from 5.85 percent a week earlier and was the highest since the week ending Aug. 5, when rates averaged 5.99 percent.

Analysts said the recent pickup in mortgage rates reflects concerns in financial markets that high oil prices may touch off inflation.

Even with the recent increases, mortgage rates are still low by historical standards, analysts said.

Freddie Mac is forecasting that rates on 30-year mortgages will rise to around 6.25 percent by the end of the year.

Low mortgage rates have powered sales of both new and existing homes to record highs for four straight years.

Rates on 15-year, fixed-rate mortgages, a popular option for refinancing, rose to 5.47 percent, up from 5.38 percent last week.

Five-year hybrid adjustable-rate mortgages averaged 5.31 percent, up from 5.22 percent. Hybrid mortgages have a fixed-rate for five years and then adjust each year after that.

Rates on one-year adjustable-rate mortgages, meanwhile, dipped to 4.20 percent, from 4.24 percent.

The nationwide averages for mortgage rates do not include add-on fees known as points. Thirty-year mortgages, 15-year mortgages and five-year ARMs each carried a fee of 0.7 point. The one-year ARM had a financing fee of 0.8 point.

A year ago, 30-year mortgages averaged 5.38 percent, 15-year mortgages were at 4.69 percent and one-year ARMs averaged 3.39 percent. Freddie Mac does not have historical data on the five-year ARM because it began tracking that mortgage this year.


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