Your Money > Your Home
Mortgage rates surge again
30-year fixed rate rises to 5.52%; 15-year climbs to 4.85%; one-year ARM rises to 3.55%.
July 10, 2003: 11:24 AM EDT

NEW YORK (CNN/Money) - Mortgage rates continue to climb off historic lows as money moves out of the bond market amid the rally in stocks, but economists note that interest rates on home loans are still affordable compared with a year earlier.

The 30-year mortgage rate climbed to 5.52 percent in the week ending July 12, from 5.40 percent a week earlier, with an average of 0.6 of a point payable up front, mortgage lender Freddie Mac reported Thursday. The 30-year averaged 6.54 percent a year ago.

The 15-year fixed-rate mortgage jumped to 4.85 percent, with 0.6 of a point up front, up from 4.75 percent last week, but well below the 6.00 percent level of a year ago.

One-year adjustable-rate mortgages (ARMs), loosely indexed to the 10-year Treasury note, rose to 3.55 percent, with 0.7 point up front, from 3.49 percent last week. At the same time last year, the one-year ARM averaged 4.66 percent.

"Although mortgage rates rose this week, they are still about one percent lower than they were at this time last year, which has led to the current frenzy of refinancing," said Frank Nothaft, Freddie Mac's chief economist.

Nothaft added, "Freddie Mac economists expect mortgage rates will fluctuate for the rest of the year, but shouldn't rise over six percent. And compared to last year's average of 6.5 percent, today's rates are still incredibly affordable."

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Freddie Mac's average mortgage rates are based on a survey of 125 lenders nationwide. The rates include those on mortgages accepted by borrowers with good credit ratings who place a 20 percent down payment on their homes, according to Freddie Mac. The total amount of each mortgage considered for the survey doesn't exceed a $322,700 limit.

Freddie Mac (FRE: down $0.70 to $53.87, 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.  Top of page

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