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Mortgages get Fed boost
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March 5, 1998: 4:17 p.m. ET
Thirty-year mortgage rate rises to 7.19 percent after Greenspan testimony
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NEW YORK (CNNfn) - Mortgage rates jumped this week in reaction to remarks made last week by Federal Reserve Chairman Alan Greenspan, mortgage firm Freddie Mac said Thursday.
Greenspan, in his semi-annual Humphrey-Hawkins testimony before Congress, cautioned that Asia's financial turmoil has put "storm clouds" on the horizon and poses continued uncertainty for the outlook at home. At the same time, he warned financial markets not to be complacent about inflation threats in the face of the nation's unusually tight labor markets.
As a result, thirty-year mortgages rose to an average 7.19 percent from 7.09 percent in the previous week, said Freddie Mac chief economist Robert Van Order, while 15-year loans rose by almost the same amount to 6.80 percent from 6.69 percent.
Van Order added that the strength in home sales also contributed to the increase in mortgage rates. The Commerce Department reported Tuesday that U.S. single-family home sales rose 10.3 percent in January to an annual rate of 877,000 units.
"Although we expect the housing market to slow this year, with refinancing tapering off at the end of the first quarter, housing activity should remain healthy for at least the foreseeable future," he said.
One-year adjustable rate mortgages also inched upward to an average 5.70 percent from 5.65 percent.
A year ago, the 30-year rate averaged 7.84 percent, the 15-year 7.35 percent and the adjustable loan 5.54 percent.
Freddie Mac said lenders charged an average 1.2 percent in fees and points on 30- and 15-year mortgages as well as the ARM, all unchanged from last week.
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