Mortgage Rates Keep Climbing

McLEAN, Va. - (06/30/06) --Rates on long-term mortgages rose fora third straight week, hitting the highest level in more than fouryears as investors continued to express worries about inflation.Freddie Mac reported Thursday--just as the Fed was preparing toraise short-term rates again. Freddie said that average rates on30-year, fixed-rate mortgages increased to 6.78% this week, from6.71% last week; while rates on 15-year, fixed-rate loans rose to6.43%, from 6.35%. Those averages are the highest since May 2002.ARM rates also continued to rise, with the average for the one-yearARM climbing to 5.82%, from 5.75% last week; and the average forthe five-year ARM moving to 6.39%, from 6.32%. "Financial marketscontinue to expect more rate hikes by the Fed over the next sixmonths, which has added upward pressure on mortgage rates," saidFrank Nothaft, chief economis for Freddie Mac. "With higherinterest rates, the housing market has begun a gradual and orderlyreversion towards historical norms," Nothaft said. "Newconstruction, home sales and house price appreciation have all beenslowing over the past few months."