30-Year Rates Rise to 6.21%

Rates on 30-year mortgages rose this week to the highest level since mid-November after a better-than-expected employment report renewed inflation worries in financial markets.

Mortgage giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages averaged 6.21 percent this week, up from 6.18 percent last week.

It was the highest level since 30-year mortgages stood at 6.24 percent the week of Nov. 16.

Analysts said that financial markets were reacting to a stronger reading on employment with 167,000 jobs created in December, the best showing in three months.

"The gain in employment in December exceeded the consensus forecast and helped ease fears about the state of the economy," said Frank Nothaft, Freddie Mac's chief economist.

"But stronger employment and higher wages put upward pressure on inflation, which in turn, translates into higher interest rates."

However, Nothaft said he did not feel mortgage rates would rise very far this year. He predicted 30-year rates would not top 6.5 percent.

He said he expected adjustable-rate mortgages to be less attractive for borrowers than they have been in recent years with the share of such mortgages for home purchases falling below 20 percent for the first time since 2003.

The Freddie Mac survey showed that other types of mortgage rates experienced slight increases this week.

Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing, edged up slightly to 5.96 percent, compared with 5.94 percent last week.

Five-year adjustable-rate mortgages rose to 6.03 percent, up from 6.02 percent, while one-year ARMs rose to 5.44 percent, up from 5.42 percent last week.

The mortgage rates do not include add-on fees known as points. Thirty-year and 15-year mortgages each carried a nationwide average fee of 0.4 point. Five-year and one-year ARMs each carried a fee of 0.5 point.

A year ago, rates on 30-year mortgages stood at 6.15 percent, while 15-year mortgages were at 5.71 percent, five-year ARMs averaged 5.76 percent and one-year ARMs were at 5.15 percent.

RADON TESTS . . . The District of Columbia's Department of the Environment is offering city residents free radon test kits. Radon is an invisible, odorless substance that has been linked to health problems; it has been found in homes all over the country. For more information and the free test kit, call 202-535-2302 or see http://ddoe.dc.gov/.

LECTURES . . . On Wednesday, 6:30-8 p.m., the Building Museum will present its 2007 Vincent J. Scully Prize to Witold Rybczynski, an author, professor and architect. After the presentation, Rybczynski will lecture on how American city design has been affected by market demand. Admission is $12 for students and museum members, $20 for nonmembers. . . . On Thursday, 6:30-8 p.m., John Quale, an assistant professor at the University of Virginia's architecture school, will discuss its ecoMOD project, a prototype for affordable ecologically sensitive housing. Admission is $12 for students and museum members, $20 for nonmembers. For information, see http://www.nbm.org/ or call 202-272-2448.

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