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The Honolulu Advertiser
Posted on: Friday, May 26, 2006

Mortgage rates reach 4-year high

By Martin Crutsinger
Associated Press

WASHINGTON Rates on 30-year mortgages climbed this week for the eighth time in the past nine weeks, hitting the highest level in nearly four years.

Freddie Mac, the mortgage company, reported yesterday that rates on 30-year, fixed-rate mortgages averaged 6.62 percent, up from 6.60 percent last week.

This week's rate was the highest since the week ending June 20, 2002, when 30-year mortgages were at 6.63 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 National Association of Realtors that sales of existing homes fell 2 percent in April with the median price of homes sold last month rising at the slowest pace in 4 1/2 years.

Analysts believe that 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 slow the economy and control inflation.

Federal Reserve Chairman Ben Bernanke said last week that while housing is slowing down this year, "this looks to be a very orderly and moderate kind of cooling."

Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing a home mortgage, rose to 6.23 percent, up from 6.20 percent last week.

A year ago, 30-year mortgages averaged 5.65 percent, 15-year mortgages stood at 5.21 percent, one-year ARMs were at 4.21 percent and five-year ARMs averaged 5.07 percent.