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One-year mortgage rate up
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May 25, 2000: 2:41 p.m. ET
Adjustable rate rises but longer-term loans hold steady after Fed rate hike
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NEW YORK (CNNfn) - Adjustable rate mortgages continued to rise, but long-term rates remained steady in response to last week's decision by the Fed to raise overnight interest rates, according to a survey released by Freddie Mac this week.
The average rate on a 30-year fixed-rate mortgage was 8.62 percent for the week ending May 26, down slightly from 8.64 percent a week earlier. 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, unchanged from the previous week and the highest since the week ended Feb. 24, 1995, when it averaged 8.34 percent.
A year ago the rate was 6.84 percent.
 A one-year adjustable rate mortgage (ARM) averaged 7.25 percent, up from the previous week's 7.15 percent and the highest since the week of April 26, 1991, when it averaged 7.36 percent.
The same mortgage averaged 5.73 percent a year ago.
"The 1-year ARM continued to rise in reaction to the Federal Reserve's recent rate hike," said Frank Nothaft, deputy chief economist for Freddie Mac. "This could lead to a slowdown in housing as homebuyers who would find the lower-rate ARM more appealing are priced out of the market."
[Click here to see a breakdown of U.S. mortgage rates by region.]
Nothaft also said continued robust economic growth -- 5.4 percent in the first quarter - could lead the Fed to raise rates again in the near future.
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. 
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