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Your Money > Your Home
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Mortgage rates reach 1-year highs
Fifth straight week of gains as 30-year hits 6.34%; 15-year at 5.66%, and 1-year ARM hits 3.80%.
August 7, 2003: 12:37 PM EDT

NEW YORK (CNN/Money) - Optimism about the strength of an economic recovery pushed the 30-year mortgage rate to a one-year high, making the one-year adjustable rate mortgage an attractive option, according to a mortgage economist.

The 30-year mortgage rate jumped to 6.34 percent in the week ending August 8, from 6.14 percent a week earlier, with an average of 0.7 of a point payable up front, mortgage lender Freddie Mac reported Thursday. This week's 6.34 percent is the highest level since Aug. 2, 2002, when the 30-year stood at 6.43 percent.

The 15-year fixed-rate mortgage jumped to 5.66 percent, with 0.7 of a point up front, up from 5.44 percent last week, but still below the 5.69 percent level of a year ago. The 15-year mortgage rate is at the highest level since Oct. 25, 2002, when it hit 5.70 percent.

And the rate on one-year adjustable-rate mortgages (ARMs), loosely indexed to the 10-year Treasury note, rose to 3.80 percent, with 0.7 point up front, from 3.68 percent last week. At the same time last year, the one-year ARM averaged 4.37 percent.

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This is the highest level for the one-year ARM since April 4, 2003.

"Signs that the economy is finally improving has generated upward pressure on fixed-rate mortgage rates over these past few weeks," said Frank Nothaft, Freddie Mac's chief economist. "Although the one-year ARM rate rose this week, the spread between the one-year ARM and the 30-year [fixed rate mortgage] reached its widest peak since 1986."

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CNNfn's Lisa Leiter takes a closer look at the increasing concern over rising mortgage rates.

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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 $0.34 to $49.10, 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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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.