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Home General News Mortgage Industry Articles Rates on 30-Year Mortgage Rise to Average of 5.25%
Rates on 30-Year Mortgage Rise to Average of 5.25% PDF Print E-mail
Written by By: Reuters   

Interest rates on U.S. 30-year fixed-rate mortgages rose 0.15 percentage point in the latest week to their highest since December, according to a survey released on Thursday by home funding company Freddie Mac

The rise in interest rates does not bode well for the U.S. housing market, complicating the government's efforts to bring mortgage rates down to enticing levels.

The battered U.S. housing market, which is in the midst of its worst downturn since the Great Depression, is both the source and a major casualty of the credit crisis. A setback for the market could prolong a turnaround for the world's largest economy.

 

Interest rates on the 30-year fixed-rate mortgage averaged 5.25 percent, with an average 0.8 point, for the week ending Feb. 5, up from the previous week's 5.10 percent, according to Freddie Mac. The 30-year fixed-rate mortgage has not been higher since the week ending Dec. 11 when it reached 5.47 percent.

"Interest rates for fixed-rate mortgages rose this week amid economic reports that were somewhat better than consensus forecasts had anticipated," Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement.

 

The recent rise in mortgage rates can be tied to U.S. Treasury yields, which are linked to mortgage rates. Treasury yields have risen sharply on fears over surging debt issuance to fund a ballooning budget gap and an array of government rescue programs.

Prior to the recent rise, 30-year mortgage rates had mostly been on a downward trend ever since the Federal Reserve unveiled a plan in late November to buy as much as $500 billion of mortgage securities backed by Fannie Mae, Freddie Mac and Ginne Mae. The program also entails buying up to $100 billion of debt issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks.