Mortgage Rates Rise On Inflation Fears

CHICAGO - April 24 2008 - Mortgage rates rose this week after economic data raised inflationary concerns in the capital markets, Freddie Mac’s chief economist said Thursday.

“For example, the Producer Price Index — a measure of wholesale inflation — increased 1.1% in March, nearly double the consensus expectations,” said Frank Nothaft, Freddie Mac vice president and chief economist, in a news release.

“March’s index of leading indicators showed a tepid increase of 0.1%, after five consecutive months of decline. 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 30-year fixed-rate mortgage averaged 6.03% for the week ending April 24, up from last week’s 5.88% average. However, the mortgage was still below its year-ago average of 6.16%.

The 15-year fixed-rate mortgage averaged 5.62% this week, up from last week’s 5.40% average. The mortgage averaged 5.87% a year ago.

Adjustable-rate mortgages ticked up, too, with five-year Treasury-indexed hybrid ARMs averaging 5.68% this week, up from last week’s 5.48% average. The ARM averaged 5.88% a year ago.
And one-year Treasury-indexed ARMs averaged 5.29% this week, up from last week’s 5.10% average. The ARM averaged 5.43% a year ago.

To obtain the rates, both fixed-rate mortgages required payment of an average 0.3 point while the ARMs required an average 0.5 point. A point is 1% of the mortgage amount, charged as prepaid interest.

A separate survey released Wednesday by the Mortgage Bankers Association showed that the volume of mortgage applications filed last week fell 14.2% compared with the week before.

U.S. mortgage rates rise on inflation fears
by Amy Hoak | MarketWatch