Conforming 30 year fixed mortgage rates average approx. 6.24%, with jumbo 30 year mortgage rates averaging approx. 7.08% according to HSH Associates newsletter for the week ending February 22, 2008. Both rates increased more than a quarter of a percent in the last week. Other excerpts from their newsletter:
“The economy is soft, perhaps still softening, but that’s yesterday’s problem. Freshly in focus are concerns that inflation is getting more of a toehold, and that yield-eating problem was at least part of the reason for a sharp rise in fixed mortgage rates this week. The combined average for the 30-year FRM leapt 27 basis points (0.27%), ending the week at 6.62%, the highest such reading of 2008. Hybrid 5/1 ARMs, quickly becoming a viable alternative (though still being shunned in the market, like nearly all ARMs) closed HSH’s survey at an average 5.84%.
One of the primary reasons for the increase in rates is that inflation simply refuses to die, and is becoming more troublesome. The latest reading for the Consumer Price Index found a 0.4% increase in costs; ‘headline’ prices have now risen by 4.4% over the past year. To be sure, they are goosed by skyrocketing food and energy costs, but even excluding them from the picture still leaves a less-than-optimal inflation situation. ‘Core’ CPI climbed by another 0.3% in January and is rising at a 2.5% annualized rate, a full half-point above the Fed’s preferred speed limit. Over the past three months, the annualized rate of inflation is 6.8% for the headline and 3.1% for the core, so the recent experience is that more inflation, rather than less, is in store.
The running of investor sentiment from one side of the seesaw to the other — from recession worries to inflation concerns and back to recession worries — makes the mortgage market especially unpredictable. Presently, there are simply too many open variables.”