Rates on 30-year mortgages rose this week to the highest level since mid-November after a better-than-expected employment report renewed inflation worries in financial markets.
Mortgage giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages averaged 6.21 percent this week, up from 6.18 percent last week. It was the highest level since 30-year mortgages stood at 6.24 percent the week of Nov. 16.
Analysts said that financial markets were reacting to a stronger reading on employment with 167,000 jobs created in December, the best showing in three months.
“The gain in employment in December exceeded the consensus forecast and helped ease fears about the state of the economy,” said Frank Nothaft, Freddie Mac’s chief economist. “But stronger employment and higher wages put upward pressure on inflation, which in turn, translates into higher interest rates.”
Nothaft, however, said he did not feel mortgage rates would rise very far this year, predicting that 30-year rates would not top 6.5 percent.
He said he expected adjustable rate mortgages to be less attractive for borrowers than they have been in recent years with the share of adjustable rate mortgages for home purchases falling below 20 percent for the first time since 2003.
The Freddie Mac survey showed that other types of mortgage rates experienced slight increases this week.
Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing, edged up slightly to 5.96 percent, compared to 5.94 percent last week.
Five-year adjustable rate mortgages rose to 6.03 percent, up from 6.02 percent while one-year ARMs rose to 5.44 percent, up from 5.42 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 and one-year ARMs each carried a fee of 0.5 point.
A year ago, rates on 30-year mortgages stood at 6.15 percent while 15-year mortgages were at 5.71 percent, five-year ARMs averaged 5.76 percent and one-year ARMs were at 5.15 percent.
Send your real estate news to Mike Benbow, Business editor, The Herald, P.O. Box 930, Everett, WA 98206, by fax at 425-339-3435 or by e-mail at economy@heraldnet.com.
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