WASHINGTON – Interest rates on 30- and 15-year mortgages rose to their highest levels since last August, according to a report issued Thursday by mortgage finance company Freddie Mac (FRE).
U.S. 30-year mortgage rates rose to an average of 5.85 percent in the week ended March 10 from 5.79 percent in the previous week. It was the highest level for 30-year mortgage rates since a matching 5.85 percent in the week ended Aug. 12, 2004.
Fifteen-year mortgages also rose in the latest week, to an average of 5.38 percent from 5.33 percent. It was the highest level since 5.40 percent in the Aug. 5, 2004, week.
One-year adjustable rate mortgages (search) (ARM) averaged 4.24 percent in the latest week, up from 4.14 percent last week.
A year ago, 30-year mortgage rates averaged 5.41 percent, 15-year mortgages 4.69 percent, and the ARM 3.41 percent.
"Last Friday's employment report reinforced the perception that the economy is on sure footing, leading bond markets to push interest rates higher again this week," Amy Crews Cutts, Freddie Mac deputy chief economist, said in a statement.
The Labor Department (search) last week reported a 262,000 increase in U.S. February nonfarm payrolls — the biggest gain in four months — and a jobless rate of 5.4 percent.
"Although inflation remains tame, the recent spike in oil prices does put inflationary pressures on the economy and was an additional factor causing higher interest rates," Cutts said.
"Even with rising mortgage rates over the last four weeks, 30-year fixed-rate mortgage rates remain an historical bargain," she said. "To date, contract rates for these mortgages have been below 6 percent for 31 weeks in a row, and we don't expect these rates will rise very much above 6-1/4 percent by year-end."
Freddie Mac said lenders charged an average of 0.6 percent in fees and points on 30-year mortgages in the latest week, down from 0.7 percent last week. They charged 0.6 percent on 15-year mortgages, unchanged from last week, and 0.7 percent on the one-year ARM, down from 0.8 percent.
Freddie Mac said the hybrid "5/1" ARM, set at a fixed rate for five years, then adjustable each year following, averaged 5.22 percent, up from 5.17 percent last week.
Freddie Mac is a mortgage finance company chartered by Congress that buys mortgages from lenders and packages them into securities for investors or holds them in its own portfolio.