Greenspan, Florida Home Loan Rates Take a Hike; 30-Year Loans Average 6.23 Percent
As retiring Federal Reserve chairman Alan Greenspan punctuated his tenure with one final hike of U.S. interest rates, home loans across the country got a little pricier.
Fixed-rate, 30-year mortgages climbed to their highest point since late December, according to lending giant Freddie Mac in its weekly nationwide survey. The most popular type of mortgage is averaging 6.23 percent as of February 2. That was up from the 6.12 percent mortgage rates of last week and 6.10 the week before that — and is the highest average rate since the week ending December 22. The cause? Investors’ concerns about inflation, mostly.
“Declines in worker productivity coupled with accelerating labor costs increase the threat of inflation down the road. Inflationary pressure generated by these two factors pushes long-term mortgage rates upward, which is why we have seen rates rise these last two weeks,” said Frank Nothaft, chief economist for Freddie Mac.
Rates on 30-year mortgages had been drifting downward since the end of December. Rates on 15-year, fixed-rate loans — a popular choice for those refinancing mortgages — experienced a similar jump, averaging 5.81 percent this week, up from 5.70 percent. One-year adjustable-rate mortgages (ARMs) increased to from 5.20 percent to 5.33 percent this week, while five-year hybrid adjustable-rate loans rose to 5.87 percent from 5.75 percent.
The Federal Reserve has boosted key short-term interest rates in its last 14 straight meetings, as part of an ongoing campaign aimed at fending off inflation.
The mortgage rates above do not include points. Both 30-year and 15-year fixed-rate loans, carried a nationwide average fee of 0.5 points last week, as did the 5/1 hybrid ARMs, while one-year ARMs had an average fee of 0.7 point. A year ago, with the housing boom in full swing, 30-year mortgages were 5.63 percent, 15-year mortgages stood at 5.14 percent, one-year ARMs averaged just 4.23 percent and five-year hybrid ARMs averaged 5.00 percent even.
Experts believe that rates will fluctuate in the coming months, but that the overall trend is for higher rates over the long run. The Mortgage Bankers Association predicts 30-year mortgage rates will reach 6.4 percent by the end of 2006, while other analysts are projecting closer to 7 percent. Either way, rising Florida home loan rates are expected to slow home sales in the state this year. How much? That will depend on inflation, and investor demand.
