Real estate rates gain for third week

Mortgage rates rose for the third consecutive week as positive economic news continued, according to surveys conducted by Freddie Mac and Bankrate.com.

In Freddie Mac’s survey, the 30-year fixed-rate mortgage averaged 5.73 percent for the week ended today, up from last week when it averaged 5.66 percent. The average for the 15-year fixed-rate mortgage this week is 5.32 percent, up from last week when it averaged 5.25 percent. Points on both the 30- and 15-year averaged 0.4.

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 5.26 percent this week, with an average 0.5 point, up from last week when it averaged 5.15 percent. The one-year Treasury-indexed ARM averaged 4.42 percent this week, with an average 0.6 point, up from last week when it averaged 4.39 percent. The last time the one-year ARM was higher was the week ended Aug. 2, 2002, when it averaged 4.45 percent.

“As the one-year ARM reaches its highest interest-rate level in almost three years, it comes as no surprise that the ARM share, based on number of applications for a mortgage, has fallen noticeably since the beginning of June,” said Frank Nothaft, vice president and chief economist at Freddie Mac. “And even though long-term rates rose for the third consecutive week, they still remain below 6 percent – still relatively close to the phenomenally low rates we experienced in June of 2003.

“We believe that the housing industry, although poised to ease a bit, will still continue to bustle as the economy continues to expand steadily and long-term rates remain affordable.”

In Bankrate.com’s survey, mortgage rates increased slightly, rising for the third consecutive week and now sitting at a two-month high. The average 30-year fixed-rate mortgage inched higher from 5.76 percent to 5.78 percent, according to Bankrate.com. The 30-year fixed-rate mortgages in this week’s survey had an average of 0.38 discount and origination points.

The 15-year fixed-rate mortgage, popular for refinancing, increased from 5.36 percent to 5.39 percent. The average rate for the jumbo 30-year fixed-rate mortgage nudged higher from 6 percent to 6.01 percent. Adjustable-rate mortgages increased at a faster pace, with the average 5/1 adjustable-rate mortgage jumping from 5.35 percent to 5.4 percent, and the one-year ARM rebounding from 4.71 percent to 4.78 percent.

The past week has produced reports on three consecutive days indicating lower-than-expected inflation, as well as Greenspan’s twice-annual Congressional testimony about the economy and monetary policy. Even though inflation readings came in lower than originally projected, and Alan Greenspan indicated more interest-rate hikes are in the offing, both had little effect on mortgage rates. Mortgage rates are closely related to yields on long-term government bonds. Yields on 10-year Treasury notes are the highest in more than two months, with the same being true for fixed mortgage rates, but only modest increases were seen in the past week.

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