Mortgage rates up across the board
By Martin Crutsinger
By Martin Crutsinger
WASHINGTON — Mortgage rates rose again this week on worries about what the Federal Reserve will do next. One-year adjustable rate mortgages hit the highest level in nearly five years.
Freddie Mac, the mortgage company, reported yesterday that rates on 30-year fixed-rate mortgages averaged 6.67 percent, up from 6.62 percent last week.
This week's rate was the highest since the week ending June 13, 2002, when 30-year mortgages were at 6.71 percent.
Rates on one-year adjustable rate mortgages were also up for the week, rising to 5.68 percent. That was the highest point for one-year ARMs since they averaged 5.71 percent in mid-August 2001. Last week, the one-year ARM was at 5.61 percent.
The housing sector, which has enjoyed five boom years, is exhibiting numerous signs of slowing under the impact of rising mortgage rates.
The latest such evidence came yesterday with a report from the government that residential construction spending dropped by 1.1 percent in April, the biggest drop in more than two years. And a report from the National Association of Realtors showed that its index for pending home sales fell for a third straight month.
Analysts believe housing will experience a gradual slowing this year, but not a crash as long as the Federal Reserve calls a halt soon to its two-year campaign to push interest rates higher to keep inflation under control.
However, financial markets are worried that the Fed, which has already boosted interest rates 16 times, may keep raising rates rather than pausing as had been hoped in response to signs of growing inflation pressures.
Frank Nothaft, chief economist at Freddie Mac, said he still believes mortgage rates will rise only "slightly higher" for the rest of this year and that the increase will be "gradual and orderly."
Rates on 15-year fixed-rate mortgages, a popular choice for refinancing a home mortgage, rose this week to 6.26 percent, up from 6.23 percent last week.
Rates on five-year adjustable-rate mortgages also rose, climbing to 6.26 percent, compared with 6.21 percent last week.
The mortgage rates do not include add-on fees known as points. The 30-year and 15-year mortgages carried a nationwide average fee of 0.4 point. The one-year ARM had an average fee of 0.7 point while the five-year ARM carried an average fee of 0.5 point.
A year ago, 30-year mortgages averaged 5.62 percent, 15-year mortgages stood at 5.20 percent, one-year ARMs were at 4.26 percent and five-year ARMs averaged 5.10 percent.