Associated Press
Saturday, February 23, 2008

Rates on 30-year mortgages rose to the highest level in seven weeks, again breaking above 6 percent.

Freddie Mac reported Thursday that rates on 30-year, fixed-rate mortgages averaged 6.04 percent this week, up from 5.72 percent last week.

That is the highest level since the first week of the year, when the average was 6.07 percent.

For the next six weeks, the rate fell below 6 percent as the markets reacted to slowing economic growth and rising risk of a recession by pushing interest rates lower.

However, growing concern about inflation has pushed long-term rates higher in the past two weeks.

One-year, adjustable-rate mortgages are still about one-half percentage point lower than they were at the start of the year, reflecting the Federal Reserve's aggressive rate cuts in January engineered to combat the economic slowdown.

"As the spread between long-term fixed-rates and adjustable rates widens, it is possible we could see a slight increase in the popularity of adjustable-rate mortgages," said Frank E. Nothaft, chief economist at Freddie Mac.

Rates on 15-year mortgages, a popular choice for refinancing, jumped up to 5.64 percent this week, compared with 5.25 percent last week. Rates on five-year, adjustable-rate mortgages rose to 5.37 percent from 5.19 percent.

Bucking the upward trend, rates on one-year ARMs dipped slightly, to 4.98 percent from 5 percent.

The mortgage rates do not include add-on fees known as points. Thirty-year mortgages and one-year ARMs both carried a nationwide average fee of 0.6 point. The 15-year mortgages and five-year, adjustable-rate mortgages both had average fees of 0.5 point.

A year ago, 30-year mortgages averaged 6.22 percent, and rates on 15-year mortgages averaged 5.97 percent. Five-year, adjustable-rate mortgages averaged 5.96 percent, and one-year ARMs were at 5.49 percent.

A sustained rebound in home sales is not expected to occur until the middle of the year, after the number of homes for sale is reduced to a more manageable level.

E-mail realty announcements torealestate@washpost.com.