johnnymk

Newsmax.com

Freddie Mac's latest survey of mortgage rates shows that the average rate on a 30-year mortgage is at its highest level since September 2003.

For the week ending April 6, 30-year fixed mortgage rates averaged 6.43%, up from 6.35% the previous week. That's a move of eight basis points in a week - 50 basis points higher than it was a year ago.

Frank Nothaft, the chief economist at Freddie Mac, cited inflation concerns as the reason for higher rates.

"There is concern that the continued high level of energy costs may lead to inflation in other sectors of the economy. Fear of inflation leads to higher mortgage rates, like the ones we see this week."

Nothaft added that stronger economic growth, relative to last year, is also a factor behind the rate increases. "In the first quarter of 2006, it appears that economic growth picked up relative to the last three months of 2005.

"Our forecast for the year as a whole is for economic growth of 3.8% in 2006, above the 3.2% in 2005, which may warrant even more Fed rate hikes than previously expected. If that is the case, mortgage rates may continue their gradual upward trend," says Nothaft.

The Fed raised rates in March to 4.75%, the 15th hike since 2004. Analysts expect one more rate increase when the Fed meets again in May.

The housing market has already begun to cool as mortgage rates inch up. If they continue to vault several basis points, it could turn this slowdown into a crash.

In addition, the spread between fixed and adjustable mortgage rates remains slim. In other words, it doesn't make sense for a borrower to take on the added risk of an adjustable rate based on the difference between the rates.

Rates on the average 15-year fixed mortgage were 6.10%, compared with the 6.11% average five-year hybrid adjustable rate. Last year, the 15-year fixed rate was 5.48% and the five-year hybrid was 5.33%.

The one-year adjustable-rate mortgage averaged 5.57% this week, way up from 4.23% last year.

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DarkFury

Glad I locked in my mortgage a few years back...

However my "rolling 2nd mortgage "home equity fund" took a nasty swing as it is .75% + the prime rate... pushing it up to almost 7% now.

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kgsilvas

Yeah, that home equity thing just hit my mom at 7%. We just locked a re-fi for her at 6.25%. Higher than when I started her on the process in early January, but better than 7% and rising!

MikeD

Still can't complain about rates in the 7% range. Look at what your parents were paying back in the day. Rates as they stand today are still an absolute bargain...

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cocojambo

any chance of the mortgage rate going low again??

clutchy

don't forget that home equity loan interest is deductible on your sch. A.

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LK was treated unfairly

thanks X