Mortgage rates crept up this week as the Fed raised short term interest rates for the 11th time. The 30 year fixed interest rate mortgage went up to 5.88 percent from 5.84, according to a survey of national lenders this week. The 30 year fixed interest rate mortgage from this survey had 0.36 origination and discount points. The 15 year fixed interest rate mortgage crept up also, going from 5.44 percent to 5.5 percent. Adjustable rate mortgages (ARMs) also went higher, with the 5/1 adjustable rate mortgage (ARM) going from 5.4 percent to 5.46 percent. The average one year ARM crept higher to 4.9 percent from 4.87 percent.
Fixed mortgage interest rates have been doing their own thing in spite of actions taken by the Fed. There have been increases in short term interest rates totaling 2.75 percentage points since 2004, and the 30 year fixed interest mortgage loan rate has dropped nearly one half a percentage point. By raising interest rates this week, the government recognized the economic impact of Hurricane Katrina but stated the long term effect would be minimal.
The government is choosing to concentrate on battling inflation. They want to keep inflation low has to offset to the decline in government bond yields and mortgage rates over the past year. Mortgage interest rates are closely tied to yield rates on government Treasury securities. Mortgage interest rates have not been a problem for prospective homeowners as the 30 year fixed interest rate mortgage has been below 6 percent since April. Many adjustable rate mortgages are raising their interest rates; lower fixed rates are still attractive for new home buyers and those refinancing their mortgages. With the 30 year fixed interest rate at 5.88 percent, now is the time to refinance if you have been putting this off.
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