Tags: Rates | 30-Year | Mortgages | the | Rise

Rates on 30-Year Mortgages on the Rise

Thursday, 10 March 2005 12:00 AM

Analysts said that last week's good news on employment, showing that the economy created more than a quarter-million jobs in February raised worries in financial markets about possible future inflation caused by stronger-than-expected economic growth.

"Last Friday's employment report reinforced the perception that the economy is on sure footing, leading bond markets to push interest interest rates higher again this week," said Freddie Mac economist Amy Crews Cutts. "Although inflation remains tame, the recent spike in oil prices does put inflationary pressures on the economy and was an additional factor causing higher interest rates."

Still, analysts said mortgage rates should rise only gradually this year if the Federal Reserve keeps to its current course of gradual quarter-point increases in short-term rates.

Freddie Mac is forecasting that the 30-year mortgage will be around 6.25 percent at the end of the year.

Sales of both new and existing homes set records for four straight years, but analysts are predicting a slight fall-off in the sales pace this year as mortgage rates continue rising.

Other mortgage rates were up as well this week, Freddie Mac reported.

Rates on 15-year, fixed-rate mortgages, a popular option for refinancing, rose to 5.38 percent this week, up from 5.33 percent last week. Rates on one-year adjustable-rate mortgages climbed to 4.24 percent this week, compared to 4.14 percent last week.

Five-year hybrid adjustable rate mortgages averaged 5.22 percent this week, up from 5.17 percent last week. These hybrid mortgages have a fixed-rate for five years and then adjust each year after that.

The nationwide averages for mortgage rates do not include add-on fees known as points. The thirty-year mortage, 15-year and five-year ARM all carried a fee of 0.6 point. The one-year ARM had a financing fee of 0.7 point.

A year ago, 30-year mortgages averaged 5.41 percent while the 15-year mortgage was at 4.69 percent and the one-year ARM was at 3.41 percent. Freddie Mac does not have historical data yet on the five-year ARM.

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Analysts said that last week's good news on employment, showing that the economy created more than a quarter-million jobs in February raised worries in financial markets about possible future inflation caused by stronger-than-expected economic growth. "Last Friday's...
Rates,30-Year,Mortgages,the,Rise
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2005-00-10
Thursday, 10 March 2005 12:00 AM
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