Peter McDougall
Interest rates bounced up 0.10 and 0.11 percentage points last week for 30-year and 15-year fixed-rate mortgages, due to renewed concerns over inflation.
While this news is bad enough, it gets worse: If you have been waiting for lower rates to refinance, you may have missed your chance; rates may already be on their way up permanently. "Mortgage rates drifted up this week over market concerns that the Federal Reserve Board may raise short-term rates later this year," explained Frank Nothaft, Freddie Mac(FRE Quote - Cramer on FRE - Stock Picks) vice president and chief economist. Nothaft went on to cite a recent Federal Reserve Bank of Minneapolis working paper that indicates the cumulative impact of the Fed's repeated rate cuts risks an increase in inflation. The Fed funds futures market, which reveals public expectations about the amount and direction of future Federal Reserve rate changes, reveals high expectations for the current 2% federal funds rate to remain steady through the June and August meetings. Many of the significant decreases in mortgage rates over the last year have come just before or just after major cuts in the federal funds rate. With no rate cuts on the horizon, mortgage rates may have nowhere to go but up. The rate for 30-year fixed-rate mortgages was up to 6.08% with an average of 0.6 points paid at closing, according to the most recent weekly Freddie Mac Primary Mortgage Market Survey. That's up from the previous average of 5.98% with 0.5 points. The rate for 15-year fixed-rate mortgages was up to 5.66% with an average of 0.6 points, up from the previous week's average of 5.55% with 0.6 points.
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