Mortgage Rate Increase
February 29, 2008
Recently, the rates on 30-year mortgages increased to their highest level in five weeks. However, they remained below the 6 percent level.
The government sponsored mortgage company, Freddie Mac, reported that 30-year, fixed-rate mortgages averaged 5.72 percent, up from 5.67 percent.
The 30-year mortgage started the 2008 year at 6.07 percent but dropped the next week to below 6 percent and has remained below that level for six weeks, which has caused some hope that lower interest rates will help kick start the battered housing market.
While the news on mortgage interest rates is somewhat positive, the news on credit is not so positive. “Many banks have been tightening credit standards, making it much harder to qualify for loans”, said Frank Nothaft, chief economist at Freddie Mac.
A sustained rebound in home sales is not expected to occur until around the middle of the year after the number of homes for sale is reduced to more manageable levels.
Interest rates on 15-year mortgages, a popular preference for refinancing, inched up to 5.25 percent, compared to 5.15 percent last week.
Rates on five-year adjustable-rate mortgages dipped to 5.19 percent, compared to 5.21 percent last week, while rates on one-year ARMs remained the same at 5.03 percent.
As a comparison, one year ago the 30-year mortgage stood at 6.30 percent. Interest rates on 15-year mortgages were at 6.03 percent. Five-year ARMs averaged 6.01 percent, and one-year ARMs were at 5.52 percent.