Mortgage Rates Yoyo Higher

October 30, 2008 No Comments »

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Mortgage rates shot up significantly during the week, climbing back to levels seen two weeks earlier as the volatility continued, Freddie Mac said today.

The traditional 30-year fixed-rate mortgage rose to 6.46 percent for the week ending October 30, up from 6.04 percent last week and 6.26 percent a year ago.

The 15-year fixed increased to 6.19 percent, up from 5.72 percent a week earlier and 5.91 percent last year.

“Long-term mortgage rates followed long-term Treasury bond yields higher this week, pushing fixed-rate mortgages up to levels of two weeks ago,” said Frank Nothaft, Freddie Mac chief economist, in a release.

Adjustable-rate mortgages saw similar movement, with the average five-year ARM up 30 basis points to 6.36 percent, well above the 5.98 percent seen during the same period last year.

The one-year ARM climbed to 5.38 percent from 5.23 percent a week earlier and , but still remains below the 5.57 percent level seen a year ago.

“The Federal Reserve’s 0.50 percentage-point cut in the discount rate and federal funds target rate on Wednesday was widely anticipated in the financial markets and is likely to keep short-term interest rates low; consequently, initial interest rates on ARMs, which tend to be set relative to other short-term rates, may remain near current levels,” Nothaft added.

Freddie’s weekly survey uses data from conforming mortgages with a loan-to-value of 80 percent.

Bankrate, which runs its own weekly survey, pinned the 30-year fixed conforming mortgage at 6.77 percent, up from 6.32 percent a week earlier.

They likened the jump to a widening of spreads on mortgage-backed securities versus those of risk-free Treasury yields, currently around 300 basis points compared to the customary 180 bps.

The 30-year jumbo mortgage increased 30 basis points to 7.95 percent, up from 7.65 percent a week earlier.

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