Mortgage Rates Rise Sharply

McLEAN, Va. – Long-term mortgage rates rose again this week, to their highest since last October, according to Freddie Mac. The average for the benchmark 30-year, fixed-rate loan climbed to 6.37% this week, from 6.20% last week; while the average for the 15-year, fixed-rate mortgage increased to 6.06%, from 5.92%. ARM rates also moved higher, with the average for the one-year ARM rising to 5.64%, from 5.48%; and the average for the five-year ARM going to 6.02%, from 5.92% last week. "Stronger than expected consumer confidence and recent comments from members of the Federal Reserve raised some inflation concerns in the market, causing it to lower expectations of a Fed rate cut this year. This helped push mortgage rates higher this week," Frank Nothaft, chief economist for Freddie Mac. "We expect a gradual rise in mortgage rates over the remainder of the year with sales slipping further in the second half of the year. A gradual recovery returns toward the end of 2007 with modest increases in sales and construction during 2008.”