Mortgage Rate Spike May Slow Housing Recovery
The recent upward trend in mortgage interest rates could slow ongoing efforts of builders to work down their unsold inventories of homes, said Freddie Mac in its Primary Mortgage Market Survey release last week.
The Freddie Mac report showed a spike in mortgage rates for the week ending on June 14 as Treasury rates rose, leaving the 30-year fixed-rate mortgage at an average 6.74%, up from 6.53% for the previous week and 6.63% a year earlier. It reached the highest level since the week ending July 20, 2006, when it averaged 6.9%.
Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 6.37% last week, up from 6.24% the previous week and 6.23% a year earlier.
One-year Treasury-indexed ARMs averaged 5.75% last week, up from 5.65% the previous week and 5.66% a year earlier.
“Mortgage rates moved sharply upward this week, with rates on 30-year fixed-rate mortgages jumping more than 20 basis points, the largest upward movement in over three years,” said Freddie Mac Chief Economist Frank Nothaft.
“These moves parallel rising yields on Treasury securities, as concerns about inflation pressures and continuing strength of consumer and business spending have dimmed hopes for an interest rate cut,” he said.
“Higher mortgage rates may weigh on the housing market’s gradual recovery,” Nothaft said. “While demand appears to have stabilized, inventories of new homes remain high, putting downward pressure on construction and home prices."
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The simultaneous Webcast of the Construction Forecast Conference — Spring 2007 held in Washington, D.C. on April 26 is available for purchase for the next three months.
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To purchase the Webcast, visit www.nahb.org/cfcwebcast.
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