Mortgage rates return to 4-year high
Freddie Mac reports 30-year rebounds to 6.80 percent, its highest level since May 2002.
NEW YORK (CNNMoney.com) -- Mortgage rates rebounded this week, returning to their highest level in more than four years, Freddie Mac reported Thursday.
The average rate on 30-year fixed-rate loans edged up to 6.80 percent for the week ending Thursday, up from 6.79 percent the week before. That's the highest level since late May 2002 when the 30-year loan rate stood at 6.81 percent.
A year ago, the 30-year mortgage rate averaged 5.73 percent.
"Financial markets were a bit jittery after core Consumer Price Index (CPI) figures for June were released that indicated inflation might still be a potential threat," Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement.
"If this were the case, the Fed would be more inclined to continue to raise rates this year. Mortgage rates reflected that thinking and rose accordingly.
"However, Fed Chief Bernanke, in his semi-annual speech to Congress, hinted that another rise in overnight lending rates might not be imminent and financial markets breathed a collective sigh of relief, which should be reflected in the results of next week's survey."
Further Fed rate hikes could of course push mortgage rates higher, though home loan rates are more closely tied to the Treasury market than to the Fed's short-term rate target.
Freddie Mac said the 15-year rate rose to an average of 6.41 percent from 6.37 percent the previous week, and up from 5.32 percent.
Five-year adjustable-rate mortgages rose last week, averaging 6.36 percent. The five-year ARM averaged 5.26 percent a year ago.
The average one-year adjustable-rate mortgage climbed to 5.80 percent from 5.75 percent. At this time last year, the loan averaged 4.42 percent.
For homeowners using adjustable rate mortgages, a rise in interest rates can mean ballooning payments.
The Mortgage Bankers Association estimates that some $330 billion worth of ARMs will adjust in 2006 and $1 trillion worth will reset by the end of 2007. _____________________