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Mortgage rates rise
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April 5, 2001: 12:25 p.m. ET
The cost of home loans creeps up as housing values grow
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NEW YORK (CNNfn) - Would-be homebuyers waiting for interest rates to drop further before entering the market may have missed the boat.
The latest survey from Freddie Mac reveals that long- and short-term mortgage rates headed north this week, as government data reveal the economy may be stronger than originally believed. Such data takes the pressure off the Federal Reserve to continue cutting rates.
According to the nationwide survey, the 30-year fixed-rate mortgage averaged 7.01 percent, with an average 0.9 point, for the week ending April 6. That's up from last week's average of 6.91 percent. A year ago, the long-term loan averaged 8.2 percent.
[Click here to see a breakdown of U.S. mortgage rates by region.]
At the same time, the average 15-year fixed-rate mortgage was 6.54 percent, with 1 point, up from last week's average of 6.54 percent. At this time last year, the 15-year mortgage stood at 7.83 percent.
One-year Treasury-indexed adjustable-rate mortgages, or ARMs, averaged 6.23 percent this week, with 1 point. That's also up from last week's average of 6.19 percent, but still lower than last year's 6.79 percent.
"Recent economic indicators suggest that the economy is not as weak as it was thought to be," said Robert Van Order, chief economist for Freddie Mac. "This means that Fed is not under any pressure to cut rates immediately, as the financial markets expected. That's why interest rates crept upwards this week."
Van Order notes that with the uptick in mortgage rates, ARMs will likely become more attracting.
"Currently, the interest rate on ARMs is about three-quarters of a percent lower than the 30-year fixed-rate-mortgage," he said. "An ARM on a $100,000 mortgage would translate into a savings of $619,000 over the first year of the loan."
Freddie Mac (FRE: Research, Estimates) or Federal Home Loan Mortgage Corp., is a publicly traded company the government established 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 entities, have become increasingly popular as an alternative to government-backed bonds, particularly with international investors. 
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