The following is an excerpt from the HSH Associates newsletter for the week ending April 13, 2007:
The general drift upward in mortgage rates continued this week, according to the nation’s leading survey of mortgage prices. Thirty-year fixed-rate mortgages (FRM) rose by six basis points (.06%), ending the weekly survey at 6.38%, setting a fresh two-month high. Hybrid 5/1 ARMs continue to rise a bit faster than fixed rates, adding eight basis point to land at 6.22%.
While there weren’t a lot of diverse economic data to review this week, some indicators, plus the minutes of the last Fed meeting, only seemed to add to the general sense of unease about the balance between growth and inflation.
After hitting a 2007 peak of 6.45%, fixed mortgage rates declined for six weeks, with a nadir of 6.26%. Since then, we’ve largely retraced those downward steps and are within a stone’s throw of matching those 2007 highs. However, the subprime ‘flight-to-quality’ buy of Treasuries is behind us for the moment, and inflation concerns are putting some upward pressure on mortgage rates again. It may surprise you to know that fixed rate mortgages are about a quarter-percent less than last year at this time, when it was still thought that the Fed was falling behind the curve in terms of raising short-term rates to combat inflation.We think that the run-up in rates is due for a pause.
Fixed Rate Variable
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