30-year mortgages inch up to 6.35%
| • | Hawai'i Real Estate Report |
By Martin Crutsinger
Associated Press
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 yesterday 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."
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 straight years. Analysts are looking for sales to drop by about 6 percent this year.
Rates on 15-year, fixed-rate mortgages averaged 6 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 last week.
Rates on five-year hybrid adjustable rate mortgages also rose, climbing to 6.02 percent, up from 5.96 percent last week.
The mortgage rates do not include add-on fees known as points. The 30-year and 15-year mortgages carried an average nationwide fee of 0.5 point while the one-year ARM had a fee of 0.8 point and the five-year ARM carried an average fee of 0.6 point.
A year ago, 30-year mortgages averaged 6.04 percent, 15-year mortgages stood at 5.58 percent, one-year adjustable-rate mortgages were at 4.33 percent and five-year hybrid adjustable rate mortgages averaged 5.43 percent.
