Rates on 30-year mortgages jump
WASHINGTON (AP) – Rates on 30-year mortgages rose for a fourth straight week, hitting the highest level in 10 months, as bond markets responded to strong employment growth.Mortgage giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages averaged 6.53 percent this week. That was up sharply from 6.42 percent last week and represented the highest point for 30-year mortgages since they averaged 6.55 percent on Aug. 10.Analysts attributed the increase to recent signs of economic strength outside of the slumping housing market including last week’s report that the economy created 157,000 jobs in May, nearly double the April pace.”Mortgage rates climbed this week owing to market concerns of a tight labor force and wage growth,” said Frank Nothaft, Freddie Mac’s chief economist.He said that bond markets have also grown concerned about renewed inflation pressures, reflected in a report this week that unit labor costs rose at a 1.8 percent annual rate in the first three months of this year, double the government’s initial estimate.Financial markets were also disappointed this week by comments from Federal Reserve Chairman Ben Bernanke, who repeated his view that inflation still represented a bigger threat to the economy than weak growth. The comments were seen as further diminishing the chances for a Fed rate cut any time soon.All mortgage rates tracked by Freddie Mac showed increases this week.Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing, rose to 6.22 percent, up from 6.12 percent last week.Five-year adjustable-rate mortgages averaged 6.24 percent, up from 6.19 percent.One-year adjustable mortgages rose to 5.65 percent, up from 5.57 percent last week.The mortgage rates do not include add-on fees known as points. Thirty-year and 15-year mortgages each carried a nationwide average fee of 0.4 point. Five-year adjustable mortgages carried a fee of 0.6 point while one-year ARMs had a fee of 0.7 point.A year ago, rates on 30-year mortgages stood at 6.62 percent, 15-year mortgages were at 6.23 percent, five-year adjustable-rate mortgages averaged 6.20 percent and one-year ARMs were at 5.63 percent.—On the Net:Freddie Mac: http://www.freddiemac.com
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