Mortgage rates increase to highest in 2 months

By Carlos Torres
Bloomberg News Service

WASHINGTON — The average rate on a 30-year fixed mortgage rose this week to the highest level more than two months, according to Freddie Mac, the No. 2 buyer of U.S. mortgages.

The 30-year fixed rate rose to 6.31 percent in the week that ends tomorrow, the highest since the week ended Aug. 9, from 6.15 percent last week. The average rate on one-year adjustable mortgages rose to 4.30 percent from 4.27 percent. The 15-year fixed rate rose to 5.70 percent from 5.56 percent.

In the past two weeks, the 30-year fixed rate has climbed more than a quarter percentage point from a 30-year low. The rate dropped to 5.98 percent in the week ended Oct. 11, the lowest since Freddie Mac starting keeping records in 1972. The increase may limit the ability of homeowners to reduce their payments or take cash out of their homes by refinancing their loans.

"The current rising rates will dull the edge of the refinancing market, but there remain homeowners who have put off refinancing for one reason or another who may now rush to their lender to take advantage of current rates," said Frank Nothaft, chief economist at Freddie Mac.

A gauge of refinancing applications fell 17.7 percent last week to the lowest since the last week of August, according to a report yesterday from the Mortgage Bankers Association of America. Still, the index has held above the average all year and refinancing accounted for 73 percent of all mortgage applications last week.

This week's 30-year fixed mortgage rate from Freddie Mac puts the average payment on a $100,000 loan, including principal and interest with 1 point, at $619.62, down from $641.30 at the same time last year, when the rate was 6.64 percent.