Fixed-rate home loans escape Fed's wrath

But rising cost of money has some fearing recession

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The Fed raised the overnight cost of money last week for 10th time since last summer, to 3.5 percent; taking the prime rate, always three points higher, to 6.5 percent.

The hike did no harm to fixed-rate mortgages, still about 6 percent, but did close what little gap remained between ARMs and fixed-rate loans. A market with no spreads leads to some goofy conversations with borrowers asking for quotes: “Young man, I asked for your rates on several different kinds of mortgages, and you say nothing but ‘Six’ over and over again. Are you deaf, or do you stammer?”