Long-term mortgage rates rose for the second consecutive week after the Fed raised the cost of money Tuesday, according to surveys conducted by Freddie Mac and Bankrate.com.

In Freddie Mac’s survey, the 30-year fixed-rate mortgage averaged 5.8 percent for the week ended today, up from last week when it averaged 5.74 percent. The average for the 15-year fixed-rate mortgage is 5.37 percent, up from last week when it averaged 5.32 percent. Points on the 30- and 15-year averaged 0.6 and 0.7, respectively.

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 5.31 percent this week, with an average 0.8 point, up from last week when it averaged 5.26 percent. The one-year Treasury-indexed ARM averaged 4.48 percent this week, with an average 0.7 point, up slightly from last week when it averaged 4.46 percent.

“Mortgage rates look like they are back on track where the Fed wants them, which is gradually rising,” said Frank Nothaft, vice president and chief economist at Freddie Mac. “Freddie Mac’s economic forecast calls for a cooling of the housing market going into next year, and gently rising rates are part of that scenario.

“However, the resiliency of the housing sector continues to amaze. Mortgage applications are running at a strong pace, according to the Mortgage Bankers Association, and the most recent housing starts figures, although coming in lower than expected, were still at near-record levels. 2005 will be another banner year for the housing industry.”

In Bankrate.com’s survey, mortgage rates increased slightly as the Federal Reserve raised short-term interest rates for the 11th consecutive time, and oil prices remained volatile. The average 30-year fixed-rate mortgage increased from 5.84 percent to 5.88 percent, according to Bankrate.com. The 30-year fixed-rate mortgages in this week’s survey had an average of 0.36 discount and origination points.

Bankrate.com reported that the average 15-year fixed mortgage rate increased as well, rising from 5.44 percent to 5.5 percent, while the average jumbo 30-year fixed-rate climbed from 6.02 percent to 6.05 percent. Adjustable-rate mortgages also moved slightly higher, with the average 5/1 adjustable-rate mortgage rising from 5.4 percent to 5.46 percent, while the average one-year ARM ticked higher from 4.87 percent to 4.9 percent.

Fixed mortgage rates have been marching to a different tune than that set by the Federal Open Market Committee, according to Bankrate.com. Even though the Fed has increased short-term interest rates by a total of 2.75 percentage points since June 2004, the average 30-year fixed-rate mortgage has fallen by nearly one-half percentage point in that time. In raising interest rates Sept. 20, the Fed acknowledged the short-term economic impact of Hurricane Katrina but indicated that over the long term it will “not pose a more persistent threat.” The Fed is, instead, preferring to focus on inflation, which is sweet music to bond investors’ ears. The Fed’s aim to keep inflation low has been a prime contributor to the decline in long-term government bond yields and mortgage rates over the past 15 months. Mortgage rates are closely related to yields on Treasury securities.

The following is a sampling of Bankrate’s average 30-year-mortgage interest rates this week in some U.S. metropolitan areas:

New York – 5.86 percent with 0.18 point

Los Angeles – 5.91 percent with 0.55 point

Chicago – 5.96 percent with no points

San Francisco – 5.92 percent with 0.33 point

Philadelphia – 5.81 percent with 0.34 point

Detroit – 5.85 percent with 0.25 point

Boston – 5.94 percent with 0.1 point

Houston – 5.88 percent with 0.75 point

Dallas – 5.88 percent with 0.57 point

Washington, D.C. – 5.75 percent with 0.53 point


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