30-year mortgage rate rises to 6.32 percent
By Courtney Schlisserman
Bloomberg News Service
WASHINGTON — The average rate on a 30-year mortgage climbed to 6.32 percent this week, Freddie Mac said, amid investor expectations the Federal Reserve will raise borrowing costs this month to keep inflation in check.
Thirty-year mortgages have rebounded after dropping to 6.28 percent in the first week of June. Except for then, mortgages have been 6.30 percent or higher since the second week of May.
Job growth and higher incomes will probably buoy sales as mortgage costs increase along with attempts by Fed policy makers to keep the economy from overheating, economists said.
"As mortgage rates rise due to the onset of Fed tightening, we expect the housing market to continue its slowdown from last year's record pace," said Brian Wesbury, chief economist at Griffin, Kubik, Stephens & Thompson in Chicago. "Nonetheless, housing will remain very strong when viewed in a historical perspective."
The one-year adjustable rate fell this week to 4.13 percent from 4.14 percent, Freddie Mac said. The 15-year fixed rate rose to 5.70 percent from 5.67 percent.
Based on this week's rate, borrowing costs on a 30-year fixed mortgage would be $620.28 a month. In the week that ended March 19, when mortgage rates were at an eight-month low of 5.38 percent, monthly borrowing costs were $60 lower. The cost at last year's 5.21 percent rate was $549.73 a month.
The average rate on a 30-year fixed mortgage this week was 1.11 percentage point higher than the record low reached a year ago.
"Interest rates are up marginally but still at historical lows, keeping housing affordable," said Stuart Miller, chief executive of Lennar Corp., in an interview yesterday. The economy is "likely to continue to fuel a housing market that remains strong."
Builders broke ground on homes at a 1.967 million annual pace last month, more than economists had expected, and building permits climbed to the highest level in more than 30 years, the Commerce Department said yesterday. Housing starts reached a 1.981 million-unit rate in April.
Applications for mortgages to purchase homes rose 4 percent last week, the Mortgage Bankers Association said yesterday. The group's index of mortgage applications had dropped in the prior week to a two-year low.
