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30-Year Mortgage Rates Crawl Upward for Fifth Week
Rising for the fifth consecutive week, long-term mortgage interest rates appear now to have found the upward track that housing analysts had expected to see months ago, although the pace of the increases is slow, according to Freddie Mac's weekly Primary Mortgage Market Survey.
In survey results released last Thursday, the 30-year fixed-rate mortgage averaged 5.82%, up from 5.77% at the end of the previous week. However, long-term rates remained below their year-earlier average of 5.99%.
“Long-term mortgage rates will more than likely rise over the next few months, albeit modestly compared to shorter-term rates,” said Frank Nothaft, Freddie Mac’s chief economist.
“As the Federal Reserve increases its targeted overnight-lending rate, home-equity loans will become more costly,” Nothaft said. “This is because many home-equity loans are tied to the prime rate, which generally follows every Fed Rate hike.”
The prime interest rate was 6.25% last week but is expected to rise to 6.5% this Tuesday as the Fed bumps up the federal funds rate by another quarter of a percentage point.
“Home owners wanting to tap into recent gains in home values have turned to a refinancing option, whereby they can extract a portion of the home equity they built over the years,” Nothaft said. “Just in the second quarter of 2005, approximately 74% of refinancing was comprised of home owners taking out a new loan balance of 5% or more, most of which had an interest rate below today’s prime rate.”
Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 5.3% last week, up from a 5.27% average the week before.
One-year ARMs averaged 4.47%, just barely up from 4.46%.
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