The Truth About Mortgage.com

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.

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 conforming 30-year fixed 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 increased 30 basis points to 7.95 percent, up from 7.65 percent a week earlier.