Long-Term Rates Jump

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McLEAN, Va. - (02/03/06) – Long-term mortgage rates leapedhigher this week as inflationary pressures pushed the marketupward, according to Freddie Mac. The average for the benchmark30-year, fixed-rate loan climbed to 6.23% this week, from 6.12%last week; while the average for the 15-year, fixed-rate loan movedto 5.81%, from 5.70%. ARM rates were mixed, with the average forthe five-year ARM holding steady 5.87% and the average for theone-year ARM rising to 5.33%, from 5.20% last week. Frank Nothaft,chief economist for Freddie Mac, said mortgage markets are growingmore concerned about the possibility of rising prices. Declines inworker productivity coupled with accelerating labor costs increasethe threat of inflation down the road, said Nothaft. Inflationarypressure generated by these two factors pushes long-term mortgagerates upward, which is why we have seen rates rise these last twoweeks. Mortgage rates will surely fluctuate in the weeks and monthsahead, but the trend now is for higher rates over the long run.Still, to keep things in perspective, mortgage rates are currentlyonly about [a half percentage point] higher than they were at thistime last year.

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