Mortgage rates move up sharply

By Jeannine Aversa
Associated Press

WASHINGTON — Mortgage rates rose sharply this week as it became clear the United States would launch a military strike against Iraq.

That eased some uncertainty in financial markets, prompting some investors to shift to stocks from bonds, economists said. Rising rates in the Treasury bond market helped spur the climb in mortgage rates.

This week's rise in mortgage rates came after rates on 30-year mortgages set a new low last week for the fifth time this year.

The average interest rate on 30-year fixed-rate mortgages for the week ending March 21 was 5.79 percent, up from last week's record low rate of 5.61 percent, Freddie Mac, the mortgage company, reported yesterday in its weekly nationwide survey.

"Lack of uncertainty around the Iraq conflict caused bond market yields to reverse their downward spiral of recent weeks and mortgage rates followed in tandem," said Frank Nothaft, Freddie Mac's chief economist.

Last week's rate was the lowest since Freddie Mac began tracking 30-year mortgage rates in 1971. Records that reach back earlier than Freddie Mac's indicate that the rate was the lowest since the early 1960s.

Rates on 30-year mortgages have been falling for much of this year. The last time 30-year mortgage rates went up was in the middle of January.

For 15-year fixed-rate mortgages, a popular option for refinancing, rates also went up this week to 5.11 percent. That compared with 4.93 percent the week before, which marked the lowest rate since Freddie Mac began tracking 15-year mortgages in 1991.

On one-year adjustable rate mortgages, rates rose this week to 3.75 percent, up from last week's 3.68 percent.

Low mortgage rates propelled home sales and home-mortgage refinancing activity to records levels last year. As consumers swap higher-interest rate home loans for lower-interest rate ones, the extra cash has helped to support consumer spending. So have rising home values.

This week's mortgage rates do not include add-on fees known as points. Thirty-year and one-year ARMs each carried an average fee of 0.6 point this week. Fifteen-year mortgages carried an average fee of 0.5 point.

A year ago, rates on 30-year mortgages averaged 7.14 percent, 15-year mortgages were 6.65 percent and one-year adjustable mortgages stood at 5.11 percent.