30-Year Fixed Mortgage Rate Jumps Back Over 5%

Mortgage ratesThe beleaguered housing finance market gave out more bad news today with the 30-year-fixed mortgage rate jumping back over the key level of 5 percent – to 5.05 percent for the week ending today, up from 4.93 the previous week, according to Freddie Mac.
A year ago the key long-term mortgage rate was at 5.07 percent. But it has bounced from a record low of 4.71 percent in December.
The average 15- year rate was 4.40 percent for the week, up from 4.33 percent. It was at 4.68 percent a year ago.
“Interest rates for 30-year fixed mortgages followed long-term bond yields higher and rose above 5 percent this week amid a mixed set of economic data reports,” Freddie Mac vice president and chief economist Frank Nothaft said in a statement.
The Mortgage Bankers Association yesterday reported that its key housing finance index showed mortgage applications last week fell 8.5 percent on a seasonally-adjusted basis from the previous week. And demand for home purchase loans is at the lowest level in 13 years, it reported.
Economists forecast that mortgage rates may increase further with the winding down of the Federal Reserve’s purchases of mortgage-backed securities next month, which has been seen as helping keep a lid on rates.
Fed Chairman Ben Bernanke yesterday told a Congressional panel that the federal funds rate would remain at its historical low level of 0-.25 for an “extended period.”  A rise in the benchmark funds rate – what banks charge each other on overnight loans – would also influence mortgage and other loan products.
Also yesterday, the Commerce Department said sales of newly built single-family homes dropped 11.2 percent in January to a 309,000-unit annual rate, the lowest rate registered since records started in 1963. It was the third consecutive monthly decrease in new home sales.

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