Originally published Thursday, October 30, 2008 at 12:00 AM
30-year mortgage rates rise sharply
Rates on 30-year mortgages spiked this week as the tumult in financial markets continued to be felt in housing finance. Mortgage giant Freddie Mac...
AP Economics Writer
WASHINGTON — Rates on 30-year mortgages spiked this week as the tumult in financial markets continued to be felt in housing finance.
Mortgage giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages averaged 6.46 percent this week, up from 6.04 percent last week. The sharp increase pushed 30-year rates to the highest level since the week of Oct. 16.
Rates on 30-year mortgages hit a high for the year of 6.63 percent in late July and then dropped to a seven-month low of 5.78 percent the week of Sept. 18.
Analysts attributed the increase to the impact the financial crisis is having on bond markets. The upheavals on Wall Street last month drove investors to the safety of Treasury securities. Now that the panic is easing a bit, investors are moving out of Treasury bonds into other investments. That movement means less demand for Treasury securities, pushing their yields higher. That increase drives up rates for mortgages linked to those investments.
"Long-term mortgage rates followed long-term Treasury bond yields higher this week, pushing fixed-rate mortgages up," said Frank Nothaft, chief economist for Freddie Mac.
The Federal Reserve cut a key interest rate by one-half point on Wednesday and Nothaft said that reduction, which followed a similar Fed rate cut three weeks ago, should help to keep interest rates linked to the Fed's short-term rates such as one-year mortgages about where they are now.
The Freddie Mac survey showed that all categories of mortgages rose this week.
Rates on 15-year fixed-rate mortgages, which are popular with people who are refinancing, rose to 6.19 percent, compared to 5.72 percent last week.
Rates on five-year adjustable-rate mortgages rose to 6.36 percent, up from 6.06 percent last week. Rates on one-year adjustable-rate mortgages rose to 5.38 percent, up from 5.23 percent last week.
The mortgage rates do not include add-on fees known as points. The nationwide fee for 30-year, 15-year and five-year mortgages averaged 0.7 point. One-year adjustable-rate mortgages averaged 0.6 point.
A year ago, the nationwide average rate on 30-year mortgages stood at 6.26 percent, 15-year mortgage rates averaged 5.91 percent, five-year adjustable-rate mortgages were at 5.98 percent and one-year adjustable-rate mortgages stood at 5.57 percent.
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On the Net:
Freddie Mac: http://www.freddiemac.com
Copyright © 2008 The Seattle Times Company
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