Interest Rate Comments from HSH Associates

Excerpts from HSH Associates newsletter for week ending June 2, 2006:

Fixed mortgage rates seem to have found a plateau over the past few weeks (a trend, rather than a blip). Since the beginning of May, the average 30-year FRM has wandered in a range of just five basis points. If the latest employment report is the basis for a top for fixed interest rates, our expectation of another Fed move later this month increases the chances of gently lower rates for much of the summer, especially if the Fed pauses in August. Simply, slower growth and additional Fed-added economic drag may be enough to press inflation back toward comfort levels, and that in turn should help long-term rates to ease somewhat, and we may even see a more pronounced inversion in the yield curve before then. Still, we need to wait for data, and if inflation fails to show signs of easing even in the face of cooler growth, the Fed will continue to raise rates.

	LOAN TYPE		TODAY	+/-	LAST WEEK
	30 yr fixed mtg		6.20%		6.19%
	15 yr fixed mtg		5.89%		5.87%
	5/1 ARM		5.77%		5.76%
	30 yr fixed jumbo mtg		6.38%		6.37%
	5/1 jumbo ARM		5.94%		5.90%

Source: bankrate.com Rates include 1 point fee