Thursday, December 24, 2009

Mortgage interest rates inch above 5 percent

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The average interest rate on a 30-year, fixed-rate mortgage (FRM) surpassed the 5 percent mark for the first time since October.

by Broderick Perkins
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Deadline Newsroom - The average interest rate on a 30-year, fixed-rate mortgage (FRM) rose another notch to 5.05 percent, surpassing the 5 percent mark for the first time since October, according to Freddie Mac's weekly Primary Mortgage Market Survey (PMMS).

For the week ending Christmas Eve, the rate comes with a 0.7 percent point. One point is one percent of the total amount financed.

Interest rates have been rising for several weeks now, following a five-week fall that left rates at a record low of 4.71 percent three weeks ago.

The current average 30-year FRM, at 5.05 percent, is up from 4.94 percent last week, but down from 5.14 percent a year ago, Freddie said.

The 15-year FRM this week averaged 4.45 percent with an average 0.6 point, also up from last week when it averaged 4.38 percent. A year ago at this time, the 15-year FRM averaged 4.91 percent.

"ARM (adjustable rate mortgage) rates increased by a lesser amount as the market consensus calls for no rate hikes by the Federal Reserve in the immediate future," said Freddie Mac's vice president and chief economist Frank Nothaft, in a prepared statement.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.40 percent this week, with an average 0.6 point, up from last week's 4.37 percent average, but way down from 5.49 percent a year ago.

The week ending Dec. 24, 1-year Treasury-indexed ARM averaged 4.38 percent, plus an average 0.6 point. Last week the rate was 4.34 percent. Last year, the 1-year ARM averaged 4.95 percent.

Nothaft said, "Meanwhile, the housing market continues to show improvement. Total existing home sales jumped 7.4 percent in November to an annualized pace of 6.54 million units, which was the most since February 2007."

He also said the number of unsold existing homes was the lowest since December 2006 and the number of unsold new homes was the least since April 1971, potentially leaving room in the near future for more new construction.

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