Analysts not sweating rise in mortgage rates

By Leigh Strope
Associated Press

WASHINGTON — Mortgage rates edged up again this week, with the 30-year rate climbing to the highest level in nearly a month.

But even with the modest rise, rates still are low enough to keep the housing market healthy, analysts said.

The average rate on 30-year mortgages rose to 5.87 percent, up from 5.85 percent last week, Freddie Mac, the mortgage giant, said yesterday in its weekly nationwide survey of mortgage rates. That was the highest level since Dec. 12, when the rate was 5.88 percent.

Rates on 30-year mortgages hit a four-decade low of 5.21 percent in mid-June. Since then, rates on the benchmark mortgages have fluctuated. For 15-year mortgages, a popular option for refinancing, rates increased to 5.17 percent, up from 5.15 percent last week.

Rates for one-year adjustable mortgages also were up this week, averaging 3.76 percent compared with 3.72 percent last week.

A year ago, rates on 30-year mortgages averaged 5.95 percent, 15-year mortgages were 5.33 percent and one-year adjustable mortgages stood at 4.03 percent.

The nationwide averages for mortgage rates do not include add-on fees known as points. Each loan type carried an average fee of 0.7 point this week.

The housing market helped to support the economy throughout 2003. Even though sales of previously owned homes slowed in November, private economists predict home sales will set a record high for all of 2003. But for 2004, housing activity is expected to slow slightly.

"With mortgage rates expected to remain around current modest levels, housing activity will continue to be brisk in 2004," said Frank Nothaft, Freddie Mac's chief economist. "Although home starts and sales will slip a little this year from last year, we should still experience construction and sales volumes that exceed 2002's levels."