Bankrate: Mortgage Rates Soar Ahead of Fed Meeting Fixed mortgage rates increased for the third consecutive week as higher interest rate expectations take hold
RISMEDIA, June 30, 2006—Fixed mortgage rates increased for the third consecutive week as higher interest rate expectations take hold. The average 30-year fixed rate mortgage jumped from 6.83 percent to 6.93 percent, the highest since April 17, 2002, according to Bankrate.com's weekly national survey of large lenders. The 30-year fixed rate mortgages in this week's survey had an average of 0.34 discount and origination points.
The average 15-year fixed rate mortgage, popular for refinancing, rose to 6.57 percent. On larger loans, the average jumbo 30-year fixed rate has cleared the 7 percent threshold by a healthy margin, climbing to 7.11 percent. Adjustable rate mortgages were also on the move. The average 5/1 adjustable rate mortgage rocketed to 6.59 percent, and the average one-year ARM increased from 6 percent to 6.09 percent.
Mortgage rates were largely unchanged from late April to mid-June. But the past three weeks have seen fixed mortgage rates rise nearly one-quarter percentage point. Typically, interest rate moves by the Federal Open Market Committee don't have a direct impact on fixed mortgage rates, and that has been the case for much of the past two years. But in recent weeks, fixed mortgage rates have climbed as bond investors come to grips with accelerating inflation and the prospect that the Fed will continue to raise interest rates. Mortgage rates are closely related to yields on long-term government bonds. With the yield on ten-year Treasury notes, the benchmark for fixed mortgage rates, roughly equal to what the fed funds rate will be following the Fed's meeting, further rate hikes may mean more of the same for mortgage rates.
Fixed mortgage rates have moved up notably in the first half of this year. As 2005 came to a close, the average 30-year fixed mortgage rate was 6.28 percent, meaning that the monthly payment on a loan of $165,000 was $1,019.16. With the average 30-year fixed rate now 6.93 percent, the same loan originated today would carry a payment of $1,090.00. Despite recent increases, fixed mortgage rates remain an attractive refinancing alternative for adjustable rate borrowers facing sharp payment adjustments.
SURVEY RESULTS
30-year fixed: 6.93% -- up from 6.83% last week (avg. points: 0.34)
15-year fixed: 6.57% -- up from 6.45% last week (avg. points: 0.31)
5/1 ARM: 6.59% -- up from 6.49% last week (avg. points: 0.3)
Bankrate's national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in the top 10 markets.
For a full analysis of this week's move in mortgage rates, go to: www.bankrate.com/mortgagerates.com
The survey is complemented by Bankrate's weekly forward-looking Rate Trend Index, in which a panel of mortgage experts predicts which way the rates are headed over the next 30 to 45 days. This week, the majority of respondents, 63 percent, predict mortgage rates will rise further in the next 30 to 45 days. Of the remainder, 25 percent forecast a retreat in mortgage rates while just 12 percent think rates will remain unchanged.
For the full mortgage Rate Trend Index, go to: www.bankrate.com/RTI
In addition to Bankrate.com, Bankrate, Inc. also owns and operates FastFind, an internet lead aggregator and MMIS/Interest.com, which publishes mortgage guides and financial rates and information. |
