Fixed-Rate Mortgage Rates Rise
Posted on | May 28, 2009 | No Comments
Rates follow long-term bond yields, pushing 30-year fixed-rate to 4.91%
By Amy Hoak, MarketWatch
CHICAGO (MarketWatch) — Rates on fixed-rate mortgages rose this week as the financial markets tried to discern the state of the economy, Freddie Mac’s chief economist said on Thursday.
The 30-year fixed-rate mortgage averaged 4.91% for the week ending May 28, up from last week’s 4.82% average; the mortgage averaged 6.08% a year ago. The 15-year fixed-rate mortgage averaged 4.53%, up from 4.50% last week and 5.66% a year ago.
Rates on 5-year Treasury-indexed hybrid adjustable-rate mortgages also rose, averaging 4.82% this week, up from 4.79% last week; the ARM averaged 5.62% a year ago.
But 1-year ARMs averaged 4.69%, down from 4.82% last week and 5.22% a year ago. The ARM hasn’t been lower since the week ending Sept. 29, 2005, when it averaged 4.68%.
To obtain the rates, the fixed-rate mortgages required payment of an average 0.7 point. The ARMs required payment of an average 0.6 point. A point is 1% of the mortgage amount, charged as prepaid interest.
“Fixed-rate mortgage rates followed long-term bond yields higher this week as financial markets try to discern the state of the economy,” said Frank Nothaft, Freddie Mac chief economist, in a news release. “Consumer confidence rose again in May and represented the largest two-month rally since records began in 1967. According to the National Association for Business Economics, the consensus of a recent survey of 45 professional forecasters called for the recession to end in the second half of this year, but the recovery is to be more moderate than the previous survey.”
Still, housing continues to be a drag on the economy, he said. Read about the record level of foreclosures and delinquencies.
“Although single-family existing home sales rose 2.5% in April, inventories of homes for sale also rose to 9.6 months from 9.0 in March, according to the National Association of Realtors,” Nothaft said. “Moreover, the NAR noted that sales of distressed homes made up 45% of the purchases in April. Such types of sales mixed with a large supply of unsold homes keep depressing house prices.” Read more on the latest data on sales of existing homes.
Mortgage applications filed last week fell a seasonally-adjusted 14.2%, compared with the week before, according to a report released by the Mortgage Bankers Association on Wednesday. See full story.
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