from AP Online
Rates on 30-year mortgages climbed this week to their highest point in nearly four years, a development that could put a further crimp in housing activity.Freddie Mac, the mortgage company, reported Thursday that rates on 30-year, fixed-rate mortgages averaged 6.49 percent for the week ending April 13. That was up from 6.43 percent last week and was the highest since mid-July of 2002.
Mortgage rates rose as Wall Street investors fretted that an improving jobs climate could drive up wages and thus inflation, analysts said. Those fears were fanned by a government report last week showing the unemployment rate dropped to 4.7 percent in March.
“The threat of higher inflation, as we all know, invariably leads to higher mortgage rates,” said Frank Nothaft, Freddie Mac’s chief economist.
Some economists believe rates on 30-year mortgages could reach 7 percent by the end of this year.
There are signs that rising mortgage rates are slowing the housing market, which registered record-high sales for five years in a row.
“If the past is any guide, the effect of rising interest rates is likely to be felt most visibly in housing markets,” Federal Reserve Governor Donald Kohn said in a speech Thursday.
Sales of existing homes are expected to fall by 6 percent this year compared with last year, while new-home sales are expected to drop by 10.9 percent, according to the National Association of Realtors.
Home prices, which have posted double-digit gains in past years, aren’t expected to go up nearly as much this year.
The association predicts the nationwide median price for an existing home will increase 6.4 percent this year, while the median new-home price will rise 2.3 percent. The median is where half sell for more and half for less.
Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing a home mortgage, averaged 6.14 percent this week, up from 6.10 percent last week.
One-year adjustable rate mortgages increased to 5.61 percent this week, compared with last week’s 5.57 percent. Rates on five-year, hybrid adjustable-rate mortgages averaged 6.13 percent this week, up from 6.11 percent last week.
The mortgage rates do not include add-on fees known as points. Thirty-year mortgages carried an average nationwide fee of 0.6 point. Fifteen-year mortgages had a fee of 0.5 point, one-year ARMs carried a fee of 0.8 point and five-year ARMs had a fee of 0.7 point.
A year ago, 30-year mortgages averaged 5.91 percent, 15-year mortgages stood at 5.46 percent, one-year ARMs were at 4.30 percent and five-year ARMs averaged 5.31 percent.