|
Mortgages head back up
|
 |
February 10, 2000: 6:52 p.m. ET
Hitting their highest rate in over three years, rates resume the march north
|
NEW YORK (CNNfn) - Mortgage rates jumped almost a tenth of a percentage point this week, thanks to a strong employment report, and they haven't been this high since July 1996, according to a survey released today by Freddie Mac.
The average rate on a 30-year fixed-rate mortgage ran 8.36 percent, up from 8.25 percent last week. Last year the same mortgage stood at 6.77 percent. You have to go back to July 12, 1996 to find a higher rate.
Though the Federal Reserve raised rates last week, mortgages stayed firm last week, as they had the week before after 10 consecutive weeks of increases, because the quarter point increase from the Fed was widely anticipated in the market.
But they are rising again now. The average for a 15-year fixed-rate mortgage also increased almost a tenth of a percent, to 7.96 percent, up from 7.85 percent. That's a record rate going back to April 1995. Twelve months ago, that kind of mortgage averaged at 6.40 percent.
States in the North Central, Southwest and West saw fixed-rate mortgages rise the most. All those regions saw an increase of 0.13 percentage points for a 30-year fixed-rate mortgage.
Click here for a breakdown of mortgage rates by region.
A one-year adjustable-rate mortgage averaged 6.73 percent, according to Freddie Mac's survey, which covers the week through Feb. 11. Last week they stood at 6.65 percent. It is at its highest level since February 1995. Last year, a 1-year adjustable-rate mortgage averaged 5.58 percent.
With interest rates higher than last year, adjustable-rate mortgages are proving popular because they are cheaper. But they are, of course, adjustable, and have been increasing of late, too.
Mortgage rates settled a little lower after the Fed raised rates last Wednesday because that was "in tune with market expectations," said Robert Van Order, Freddie Mac's chief economist. "Of course, all that changed when employment figures released on Friday showed a thriving labor market. This re-ignited fears of wage pressure leading to inflation."
That combined with the uncertainty in the bond market, which has teetered following the government's announcement it would buy back bonds and issue fewer 30-year Treasuries. The combination makes it tough to predict where mortgage rates will head from here, Van Order said. The market will be watching the Producer Price Index and Consumer Price Index, both due next week, he added.
Freddie Mac (FRE: Research, Estimates), or the Federal Home Mortgage Corp., is a publicly traded company that the government set up in 1970 to provide a flow of funds to mortgage lenders.
It buys mortgages from banks, bundles them, and then sells them as mortgage-backed securities. Its products and the products of other similar agencies have become increasingly popular as an alternative to government-backed bonds, particularly with international investors. 
|
|
|
|
|
|
Track your stocks
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
