Key 30-Year Mortgage Rate Back Over 5%, Freddie Mac Says

Mortgage ratesThe 30-year fixed-rate mortgage averaged 5.08 percent the week ending today, reaching its second highest level this year and more than a quarter point higher compared to this time last year.
The record low of 4.71 percent was reached in early December, according to Freddie Mac’s weekly survey started in 1971.
The 15-year fixed rate mortgage came in at 4.39 percent this past week, up from the previous week’s 4.34 percent, said Freddie Mac. A year ago at this time, the 15-year rate averaged 4.52 percent. 
“Interest rates for fixed mortgages rose this week following a run up in long-term bond yields, while ARM rates eased slightly,” said Frank Nothaft, Freddie Mac vice president and chief economist.  “Rates on 30-year fixed loans were the highest since the starting week of this year.”
Most industry analysts expect the key long-term mortgage rates to creep up through the rest of the year, possibly near the 6 percent mark.
Most expect the Federal Reserve to hold its benchmark federal funds rate at its historically low 0-.25 percent rate this year, as the economic recovery continues at a mild pace. The Fed has maintained its “extended period” pledge on monetary policy.
But the Fed also ended its purchase program of $1.25 trillion in mortgage-backed securities yesterday, as originally planned.
That program has helped stabilize the housing finance market, keep mortgage rates at their near-record lows.  Economists initially feared the rates would bounce sharply with the program’s end, but Fed officials have insisted that the private market for mortgage-back securities have sufficiently recovered.
Helping bolster confidence was the U.S. Treasury’s late December announcement of open-ended support of debts and securities tied to the mortgage financing giants, Fannie Mae and Freddie Mac. Both government sponsored enterprises were taken over by the government in 2008. They have sought $127 billion in bailouts so far.

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