On Thursday, Freddie Mac, the mortgage company, reported that rates on 30-year, fixed-rate mortgages averaged 6.63%, up slightly from 6.62% last week, and a full percentage point above where they were a year ago.

The rates on 30-year mortgages had fallen last week after hitting a high the previous week of 6.67 percent, the highest level in nearly four years. The housing sector, which has enjoyed five boom years, is exhibiting numerous signs of slowing under the impact of rising mortgage rates. Analysts are predicting that sales will decline by around 10% this year as a gradual increase in mortgage rates cools activity.

Frank Nothaft, chief economist at Freddie Mac, said that there has been no drastic movement in mortgage rates and they see nothing on the horizon that would bring about any extreme rise or fall in rates going forward.

However, Federal Reserve Chairman Ben Bernanke jolted financial markets last week by indicating that inflation was still a major concern at the Fed. On Wednesday, the government reported that core inflation, excluding energy and food, was rising during the past three months at the fastest pace in 11 years.

Meanwhile, analysts said the news on inflation made a 17th quarter-point rate hike a virtual certainty when the Fed next meets on June 28-29. Other categories of mortgages also rose this week. Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing a home mortgage, increased to 6.25%, up from 6.23% last week.

Moreover, rates on one-year adjustable rate mortgages rose to 5.66%, up from 5.63% last week. Rates on five-year adjustable-rate mortgages climbed to 6.23%, up from 6.20% last week.

These mortgage rates do not include add-on fees known as points. The 30-year and five-year mortgages each carried a nationwide average fee of 0.5 point while the 15-year and one-year ARM had average fees of 0.6 point.

In 2005, 30-year mortgages averaged 5.63%, 15-year mortgages stood at 5.22%, one-year ARMs were at 4.25% and five-year ARMs averaged 5.10%.

By M. Sese
http://realestatepress.org