Mortgage rates ticked higher this week as markets began to factor in another likely rate hike from the Federal Reserve next week, according to surveys conducted by Freddie Mac and Bankrate.com.
In Freddie Mac’s survey, the 30-year fixed-rate mortgage averaged 6.12 percent, with an average 0.5 point, for the week ended today, up from last week’s average of 6.1 percent. The average for the 15-year fixed is 5.7 percent, up from last week’s average of 5.67 percent. Points on both the 30- and 15-year averaged 0.5.
The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 5.75 percent this week, with an average 0.6 point, unchanged from last week when it averaged 5.75 percent. The one-year Treasury-indexed ARM averaged 5.2 percent, with an average 0.6 point, up from last week when it averaged 5.18 percent.
“The miniscule rise in mortgage rates this week most likely reflects market expectations that the Federal Reserve (Fed) will once again raise rates next week,” said Frank Nothaft, Freddie Mac vice president and chief economist. “At the beginning of last week, financial markets priced in a 90 percent probability that the Fed would increase short-term rates. Today, the odds are statistically certain.
“Keep in mind, however, long-term rates are still below December’s monthly average and continue to fuel the housing market. Last week, mortgage applications for home purchases were stronger than last December’s average. Even refinancing activity remains strong, averaging around 43 percent of all mortgage applications.”
In Bankrate.com’s survey, fixed mortgage rates reversed course this week, rising modestly. The average 30-year fixed rate mortgage increased from 6.12 percent to 6.17 percent, according to Bankrate.com. The 30-year fixed-rate mortgages in this week’s survey had an average of 0.29 discount and origination points.
Bankrate.com reported that the average 15-year fixed mortgage rate inched higher, from 5.73 percent to 5.75 percent, while the average jumbo 30-year fixed-rate increased from 6.35 percent to 6.38 percent. Adjustable-rate mortgages climbed at a similar pace, with the average 5/1 adjustable-rate mortgage rising from 5.71 percent to 5.75 percent, and the average one-year ARM moving up to 5.5 percent from 5.46 percent.
Mortgage rates moved slightly higher this week, on the back of higher Treasury yields, according to Bankrate.com. New government debt issuance to refinance maturing debt pushed yields on long-term government bonds, and fixed mortgage rates, higher. But this past week may have been the calm before the storm. In the coming week, the first estimate of fourth-quarter 2005 economic growth, Gross Domestic Product, will be released. In addition, the Federal Open Market Committee meets on Jan. 31 and is expected to raise interest rates for the 14th consecutive time. This will be Alan Greenspan’s final FOMC meeting before retiring as Fed chairman and handing over the reigns to Ben Bernanke. These events could each contribute to additional mortgage rate volatility — up or down — in the coming week.
The following is a sampling of Bankrate.com’s average 30-year-mortgage interest rates this week in some U.S. metropolitan areas:
New York – 6.14 percent with 0.19 point
Los Angeles – 6.22 percent with 0.46 point
Chicago – 6.28 percent with 0.05 point
San Francisco – 6.27 percent with 0.19 point
Philadelphia – 6.05 percent with 0.28 point
Detroit – 6.24 percent with no points
Boston – 6.24 percent with 0.02 point
Houston – 6.09 percent with 0.65 point
Dallas – 6.15 percent with 0.55 point
Washington, D.C. – 5.99 percent with 0.54 point
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