Mortgage rates edge higher on Fed
Freddie Mac says home loan rates are rising in anticipation of higher interest rates.
June 10, 2004: 12:47 PM EDT

NEW YORK (CNN/Money) - Home loan rates rose in anticipation that the Federal Reserve will raise rates sooner, and faster, than many market watchers expect, mortgage financier Freddie Mac said Thursday.

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"All eyes will be on the Fed for the next few months at least. How aggressive or how measured the coming rate hikes are will determine the future direction of both short- and long-term mortgage rates," said Frank Nothaft, Freddie Mac vice president and chief economist.

For the week ended June 11, the rate on 30-year fixed-rate mortgages averaged 6.30 percent, with an average 0.7 point payable up front, up slightly from the previous week when it averaged 6.28, according to Freddie Mac.

Last year at this time, the 30-year averaged 5.21 percent.

The 15-year mortgage advanced to 5.67 percent from last week's 5.63 percent, with 0.7 point payable up front. A year ago, it was 4.60 percent.

The one-year adjustable rate mortgage (ARM) averaged 4.14 percent, up from 3.98 percent the previous week, with 0.7 point payable up front. A year earlier it averaged 3.54 percent.

"The 1-year ARM responds more directly to movements by the Fed," said Nothaft. "And market chatter has it that the Fed will not only raise rates at the end of this month, but may do so consecutively throughout the rest of the year."

"News like that is good news for keeping long-term fixed-rate mortgage rates low since those are more sensitive to inflationary expectations."

Freddie Mac's average mortgage rates are based on a survey of 125 lenders nationwide.

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Freddie Mac

Freddie Mac (FRE: up $0.55 to $60.32, 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 popular as an alternative to government-backed bonds, notably with international investors.  Top of page

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