Posted on: Friday, May 14, 2004
Mortgages rates rise on inflation, rate-hike fears
| • | Current mortgage rates |
By Jeannine Aversa
Associated Press
WASHINGTON — Rates on 30-year mortgages rose sharply this week as signs of a strong economy and concerns about inflation added to Wall Street's speculation that the Federal Reserve might act sooner than anticipated to raise interest rates.
The mortgage company Freddie Mac reported yesterday that rates on 30-year fixed-rate mortgages climbed to 6.34 percent. It was the eighth consecutive weekly increase since rates hit a low for the year of 5.38 percent the week of March 18.
A national survey of rates showed that the increase from 6.12 percent last week left 30-year mortgages at their highest level since they averaged 6.44 percent the week of Sept. 5.
A government report last week that payrolls grew robustly in April "reaffirmed market expectations that the Fed will move sooner now rather than later," said Freddie Mac's chief economist, Frank Nothaft.
That helped push bond rates up, causing long-term mortgage rates to rise.
Recent economic reports, including one yesterday showing wholesale prices jumped in April, suggested that inflation is rising.
"The focus of concern shifts away from the lack of job growth and toward inflation as a deciding factor for the Fed in determining the timing of future action," Nothaft said.
Some economists believe the Fed's first rate increase in more than four years could come as early as June.
Other mortgage rates rose as well this week.
Rates for 15-year, fixed-rate mortgages rose to 5.72 percent, compared with 5.47 percent last week. For one-year adjustable rate mortgages, rates increased to 3.90 percent this week, compared with 3.76 percent last week.
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.
This time last year, rates on 30-year mortgages averaged 5.45 percent, 15-year mortgages were 4.84 percent and one-year adjustable mortgages stood at 3.67 percent.
