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Mortgage rates cruise higher
Fourth straight week of gains as 30-year hits 6.14%; 15-year at 5.44%, and 1-year ARM hits 3.68%.
July 31, 2003: 11:43 AM EDT

NEW YORK (CNN/Money) - Continued signs of an economic recovery led to the fourth straight week of gains for mortgage rates as Treasury prices remained in a downward trend, pushing yields higher.

The 30-year mortgage rate jumped to 6.14 percent in the week ending July 31, from 5.94 percent a week earlier, with an average of 0.5 of a point payable up front, mortgage lender Freddie Mac reported Thursday. The 30-year averaged 6.43 percent a year ago.

The 15-year fixed-rate mortgage jumped to 5.44 percent, with 0.5 of a point up front, up from 5.27 percent last week but well below the 5.84 percent level of a year ago. The 15-year mortgage rate is at the highest level since Dec. 13, 2002.

The rate on one-year adjustable-rate mortgages (ARMs), loosely indexed to the 10-year Treasury note, rose to 3.68 percent, with 0.5 point up front, from 3.67 percent last week. At the same time last year, the one-year ARM averaged 4.45 percent.

"Signs that the economy may have turned the corner led to slightly higher mortgage rates, and this will surely begin to slow the pace of refinancings as we go into the last quarter of the year," said Frank Nothaft, Freddie Mac's chief economist.

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.

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Freddie Mac (FRE: up $0.46 to $49.61, 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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