Mortgage Rates Continue Upward Climb
Mortgage rates posted a second straight week of increases, as market participants continued to place stock in a substantial rate cut by the Federal Reserve later this month. Freddie Mac (FRE) said Thursday that 30-year fixed-rate mortgages averaged 6.03 percent for the week ending April 24, up 15 basis points from one week ago, when rates averaged 5.88 percent. Despite the jump, rates are still below year-ago levels, Freddie said; last year at this time, the 30-year FRM averaged 6.16 percent. Five-year Treasury-indexed hybrid ARMs averaged 5.68 percent this week, up from last week when the average stood at 5.48 percent. One-year ARMs averaged 5.29 percent, up from 5.10 percent one week ago, Freddie said. "Average rates on mortgages increased across the board this last week as the most recent economic data raised inflationary concerns in the capital markets," said Frank Nothaft, Freddie Mac vice president and chief economist. "For example, the Producer Price Index – a measure of wholesale inflation – increased 1.1 percent in March, nearly double the consensus expectations. "March’s index of leading indicators showed a tepid increase of 0.1 percent, after five consecutive months of decline. As a result, trading of federal funds futures contracts implied a reduced likelihood of a substantial rate cut at the next Federal Open Market Committee meeting." Sources suggested to HW on Thrusday that participants are beginning to shift their views slightly in the area of rate cuts, as expectations on the size of the cut have moderated and many now expect that the Fed will look to take a breather on rate cuts after April's meeting. For more information, visit http://www.freddiemac.com.