Mortgages Rates Rise for Second Week

By MARTIN CRUTSINGER AP Economics Writer © 2007 The Associated Press
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WASHINGTON — Mortgage rates around the country rose for a second straight week with 30-year mortgages hitting the highest level since late February.
In its weekly survey, mortgage giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages averaged 6.22 percent this week.
That was up from 6.17 percent last week and put the 30-year rate at the highest point since it was also 6.22 percent the week of Feb. 22.
Analysts attributed the increase to the government's release of better-than-expected job numbers for March with the unemployment rate dipping to 4.4 percent, matching a five-year low, while 180,000 jobs were created, the strongest showing in three months.
That unexpected strength pushed interest rates higher as financial markets believed it is less likely that the Federal Reserve will feel the need to cut rates anytime soon.
"Interest rates in general ticked up following the release of the March employment data, which showed stronger job growth than what the market expected," said Frank Nothaft, Freddie Mac's chief economist.
Nothaft said that even with the slight rise in rates in recent weeks, mortgage refinancing activity remains strong. He said a large number of the refinancing applications are coming from homeowners who want to get a new mortgage before their current adjustable-rate mortgage resets to a higher rate.
In its latest forecast, the National Association of Realtors said Wednesday that the median price of an existing home is likely to decline this year by 0.7 percent from the 2006 level, which would be the first time on record that prices have fallen for the entire year.
The Realtors also forecast that tighter lending standards in the wake of rising delinquencies will depress sales this year further than had been expected. The Realtors projected that existing home sales will drop to 6.34 million in 2007, down 2.2 percent from 2006, which had been the first year that sales had fallen after setting sales records for five straight years.
Other mortgage rates also rose this week, Freddie Mac said in its nationwide survey.
Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing, rose to 5.90 percent this week, up from last week's 5.87 percent.
Five-year adjustable rate mortgages averaged 5.93 percent, compared with 5.92 percent last week. One-year adjustable mortgages edged up to 5.47 percent this week from 5.44 percent last week.
The mortgage rates do not include add-on fees known as points. Thirty-year and 15-year mortgages both carried a nationwide average fee of 0.4 point. Five-year and one-year adjustable mortgages each carried an average fee of 0.5 point.
A year ago, rates on 30-year mortgages stood at 6.49 percent while 15-year mortgages were at 6.14 percent. Five-year adjustable-rate mortgages averaged 6.13 percent and one-year adjustable-rate mortgages were at 5.61 percent.