|
Mortgage rates climb
|
 |
May 18, 2000: 3:31 p.m. ET
Fed decision to raise interest rates sends rates to highest levels in five years
|
NEW YORK (CNNfn) - Mortgage rates edged higher this week in line with the Fed's decision to raise overnight lending rates, according to a survey released Thursday by Freddie Mac.
The average rate on a 30-year fixed rate mortgage was 8.64 percent for the week ending May 19, up from 8.52 percent a week earlier. This was also the highest level since rates hit 8.73 percent on Feb. 24,1995.
The same mortgage was 7.23 percent a year ago.
The average for a fixed-rate 15-year mortgage was 8.31 percent this week, the highest since the week ended Feb. 24, 1995, when it averaged 8.34 percent.
A year ago the rate stood at 6.83 percent.
 A one-year adjustable rate mortgage (ARM) averaged 7.15 percent, up from the previous week's 6.96 percent and the highest since the week of Aug. 2, 1991, when it averaged 7.22 percent.
The same mortgage averaged 5.76 percent a year ago.
"The Fed's actions on Tuesday to raise overnight lending rates also worked to push mortgage rates higher this week," said Frank Nothaft, deputy chief economist for Freddie Mac. "Because the Fed's action impacts short-term rates more than long-term, the largest effect was on ARMS, which rose significantly after the Fed announced its raise."
[Click here to see a breakdown of U.S. mortgage rates by region.]
Nothaft said the Fed left open the possibility of even more increases to put the brakes on the robust economy, which in turn would push mortgage rates even higher.
Freddie Mac (FRE: Research, Estimates), or Federal Home Mortgage Corp., is a publicly traded company the government set up in 1970 to provide a flow of funds to mortgage lenders.
It buys mortgages from banks, bundles them, and then resells them as mortgage-backed securities. Its products and the products of other similar agencies have become increasingly popular as an alternative to government-backed bonds, particularly with international investors. 
|
|
|
|
|
 |
|
