After three weeks without any movement, rates for 30-year fixed-rate mortgages rose 0.15 percentage points last week to an average of 6.03% with 0.3 point, according to
Analysts blame the sudden jump in rates on increased concerns over inflation. "March's index of leading indicators showed a tepid increase of 0.1 percent, after five consecutive months of decline," says Frank Nothaft, Freddie Mac vice president and chief economist. "As a result, trading of federal funds futures contracts implied a reduced likelihood of a substantial rate cut at the next Federal Open Market Committee meeting."
The other three mortgage rates recorded in the survey also jumped on the news. The rates for 15-year FRMs reached 5.62% with 0.3 point -- up almost an entire quarter percentage point from last week's average of 5.40% with 0.5 point. The average rate for 5/1-year adjustable rate mortgages rose to 5.68%, up 0.20 percentage points and 1-year ARMs rose a similar 0.19 percentage points to 5.29% with 0.5 point.
committee meeting is scheduled for this week. The current federal funds rate sits at 2.25%, and the probability of a rate change implied by
suggests the Fed will announce a small quarter percentage point decrease.
The recent jump is the first significant movement in the average mortgage rates since the Fed decided in March to cut the federal funds rate by 0.75 percentage points. That decision set off declines in 30-year and 15-year fixed mortgage rates, which fell 0.26 and 0.33 percentage points, respectively.
And although mortgage rates are up appreciably from a month ago, they remain lower than at the close of 2007, and are 0.13 to 0.25 percentage points lower than they were at this time last year.
Nevertheless, some analysts say the recent shift could indicate that mortgage rates have turned the corner. As the Fed balances the needs of the economy against rising inflation pressures, it is becoming less and less likely that rates will drop significantly from where they are now.
If you are thinking of refinancing but haven't put in the paperwork yet, now might be a good time to get going. And to get you started, here are some of the more attractive mortgage offers from the mortgage section of BankingMyWay.com. All of the rates are based on a 30-year fixed rate loan of $175,000 for a single-family, owner-occupied residence, with a 20% down payment.
- In New York City, Wachovia Bank, National Association is offering a rate of 5.750% (no points) with an APR of 5.906%
- In Chicago, Marquette Bank is offering a rate of 6.125% (no points) with an APR of 6.163%
- In San Francisco, the Internet bank American Lending is offering a rate of 5.875% (no points) with an APR of 6.022%
- In Dallas, Neighborhood Credit Union is offering a rate of 5.750% (no points) with an APR of 5.840%
- In Boston, the Internet bank Maricopa Mortgage, LLC is offering a rate of 5.875% (no points) with an APR of 6.021%
- In Houston, Wachovia Bank, National Association is offering a rate of 5.750% (no points) with an APR of 5.882%
Peter McDougall is a freelance writer who lives in Freeport, Maine, with his wife and their dog.