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Rate Update
Jun 19, 12:48 PM
EDT
Rates on 30-year
mortgages rise for fourth straight week to highest level in nearly 9
months
By MARTIN
CRUTSINGER
AP Economics Writer
WASHINGTON (AP)
-- Rates on 30-year mortgages kept surging this week, rising to the
highest level in nearly nine months, reflecting more concerns about
what the Federal Reserve will do to combat a growing inflation
threat.
Freddie Mac, the
mortgage company, reported Thursday that 30-year fixed-rate
mortgages averaged 6.42 percent this week. That was up sharply from
6.32 percent last week.
It was the
highest level for 30-year mortgages since they averaged 6.42 percent
for the week of Sept. 27 and marked the fourth straight week that
they have been above 6 percent.
Frank Nothaft,
chief economist at Freddie Mac, said the increased concerns about
inflation were fueled by reports in the past week showing that both
consumer prices and wholesale prices rose by significant amounts in
May. This spurred further increases in the futures market where
investors place bets on future Fed actions. That market is pointing
to a Fed rate increase in September.
In a speech
earlier this month, Federal Reserve Chairman Ben Bernanke signaled
deepening worries about inflation and said the Fed would "strongly
resist" any tendency for Americans' expectations about price
increases to become unsettled.
From last
September through April, the central bank aggressively cut rates to
try to keep the economy from falling into a recession, but now the
Fed's focus has shifted to worries about inflation.
Other types of
mortgages showed increases this week, according to the Freddie Mac
survey.
Rates on 15-year
fixed-rate mortgages rose to 6.02 percent, up from 5.93 percent last
week.
The five-year
adjustable-rate mortgage rose to 5.89 percent, up from 5.70 percent
last week. The rate on a one-year adjustable-rate mortgage rose to
5.19 percent, compared to 5.09 percent last week.
The housing
market is facing numerous headwinds - from slumping prices to rising
mortgage defaults that are dumping more homes on an already glutted
market.
The mortgage
rates do not include add-on fees known as points. The nationwide fee
for 30-year and 15-year mortgages averaged 0.7 point. The fee on
five-year and one-year mortgages averaged 0.6 point.
A year ago,
rates on 30-year mortgages stood at 6.42 percent, 15-year mortgage
rates averaged 6.08 percent, five-year adjustable-rate mortgages
were at 5.90 percent and one-year adjustable-rate mortgages averaged
5.66 percent.
Source: ap.org
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