Posted on: Friday, April 9, 2004
Mortgage rates climb for 3rd week
By Joe Richter
Bloomberg News Service
The average 30-year fixed mortgage rate rose to 5.79 percent this week, the third consecutive increase and the biggest jump since July, after an unexpectedly strong jobs report last week sparked a rise in borrowing costs.
The 30-year rate, which had dropped to a nine-month low of 5.38 percent March 19, was up more than a quarter percentage point from 5.52 percent a week earlier, according to Freddie Mac, the No. 2 purchaser of U.S. mortgages. The rise was the biggest since the week ended July 25, when the rate reached 5.94 percent.
The jump in mortgage rates contributed last week to the biggest drop in applications to finance home loans since early December, the Mortgage Bankers Association said yesterday. Refinancing has been providing extra cash to consumers, whose spending accounts for 70 percent of the economy, helping to fuel the expansion.
"The bond market reacted to the welcome news last Friday that jobs are finally being created, which is much-needed for continued expansion of the economy," said Amy Crews Cutts, Freddie Mac's deputy chief economist, in a statement.
Mortgage rates move in step with yields on government securities, which surged after the Labor Department said a week ago that the economy added 308,000 jobs last month, the most since April 2000. The report heightened investor expectations that the Federal Reserve will boost its target interest rate this year to keep inflation from accelerating.
In yesterday's report, Freddie Mac said the one-year adjustable mortgage rate rose to 3.65 percent from 3.46 percent last week. The one-year rate had reached 3.36 percent March 26, the lowest in two decades of the company's record keeping. The 15-year fixed rate rose to 5.12 percent this week from 4.84 percent, Freddie Mac said.
The Mortgage Bankers Association said yesterday that its financing applications index declined 7.2 percent last week, the third straight drop.
The Washington-based group's gauge of applications to refinance existing mortgages fell 15 percent, the second straight decline.
