30-Year-Loan Rates Rise to 5.42 Percent
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Saturday, June 27, 2009
Rates for 30-year home loans edged up this week, remaining above record lows reached over the spring.
The average rate for a 30-year fixed mortgage was 5.42 percent, up from 5.38 percent a week earlier, mortgage company Freddie Mac said Thursday.
"Mixed economic reports on the state of the housing market helped hold mortgage rates fairly flat," Frank E. Nothaft, Freddie Mac's chief economist, said in a statement.
Rates on 30-year mortgages fell to a record low of 4.78 percent earlier this year. But then they rose as high as 5.6 percent this month after yields on long-term government debt, which are closely tied to mortgages rate, climbed as investors worried that the huge surplus of government debt hitting the market could trigger inflation.
Since then, the yield on the 10-year Treasury note has fallen back from an eight-month high of 4.01 percent reached last week to 3.61 percent early Thursday afternoon.
Though there are signs the troubled U.S. housing market is beginning to stabilize, higher rates could threaten or slow any recovery, since prospective buyers would be able to borrow less money and might decide to hold off on their purchases. The median price of an existing home fell 17 percent in May from a year earlier, the National Association of Realtors said Tuesday.
"For those who have the flexibility to wait, there's a lot more juice in waiting if home prices are going down," said Dana Johnson, chief economist at Dallas-based Comerica Bank. Economists worry that the housing market is so fragile that rates that would have seemed attractive a decade ago are no longer very enticing.
U.S. mortgage applications rose last week for the first time in a month. The Mortgage Bankers Association's index of applications to purchase a home or refinance a loan rose 6.6 percent, to 548.2, in the week ended June 19.
Freddie Mac collects mortgage rates on Monday through Wednesday from lenders around the country. Rates often fluctuate significantly, even within a given day.
The average rate on a 15-year fixed-rate mortgage fell to 4.87 percent from 4.89 percent last week, according to Freddie Mac.
Rates on five-year, adjustable-rate mortgages averaged 4.99 percent, up from 4.97 percent. Rates on one-year, adjustable-rate mortgages fell to 4.93 percent from 4.95 percent. Home buyers can reduce their mortgage rates by buying points, which typically amount to 1 percent of the value of the loan. All loans in Freddie Mac's survey averaged 0.7 point.
