Monday, June 08, 2009
Mortgage Rates Reach 25 Week High
Mortgage rates jumped across the board this week, with 30 year fixed mortgages reaching their highest point so far this year.
Freddie Mac reports a jump in the rate for the most popular conventional mortgages to a 25-week high of 5.29 percent during the week ended June 4, up from 4.91 percent the prior week. As recently as two months ago, rates had been 4.78 percent. The 15-year fixed rate also increased, rising to 4.79 percent from 4.53 percent.
Rates are still low by historical standards. Since 1985, the 30-year fixed mortgage rate has averaged 7.84 percent. That's distorted by years of double-digit rates in the 1980s and early 1990s, but even if you look at more recent times, today's rates look good. In 2008, the median rate on the 30 year fixed was 6.2 percent, meaning it was higher than that for half the year.
Analysts advanced a number of theories to explain this week's skyrocketing mortgage rates. A federal budget deficit of nearly $2 trillion, with more to come, is believed to be inflationary, and investors are demanding higher interest rates to compensate for the inflation risk.
Today, bankrate.com is posting an average rate pf 5.45%.