Rates Continue Upward Climb; Reach 10-week High
Mortgage rates increased for the sixth time in 7 weeks with the average 30-year fixed rate rising to 6.26 percent, the highest point in the past 10 weeks. According to Bankrate.com's weekly national survey of large lenders, the 30-year fixed rate mortgages had an average of 0.32 discount and origination points. The average 15-year fixed rate mortgage popular for refinancing climbed to 6.03 percent. On larger loans, the average jumbo 30-year fixed rate increased by a similar amount to 6.52 percent. Adjustable mortgage rates moved higher as well, with the average 5/1 ARM stepping higher to 6.2 percent and the average one-year ARM returning to the 6 percent threshold for the first time since August. Economic data continues to be overwhelmingly positive, a factor behind the increase in mortgage rates over the past half-dozen weeks. More evidence of underlying economic strength piled up this week, with retail sales for December exceeding expectations. The labor market continues to surprise, with weekly unemployment claims falling below the 300,000 mark. All of this has fueled concerns about inflation and delayed any possible Fed rate cut. As a result, investors are commanding higher yields on government and mortgage- backed bonds. Mortgage rates are closely related to the yields on these bonds. Fixed mortgage rates are still much lower since the Fed stopped raising interest rates. When the Fed last raised interest rates in June 2006, the average 30-year fixed mortgage rate was 6.93 percent. At the time, the monthly payment on a loan of $165,000 was $1,090. With the average 30-year fixed rate now 6.26 percent, the same loan originated today would carry a monthly payment of $1,017.01.