July 22, 2005
Consumers seeking a home mortgage now face slightly higher interest
rates. The average mortgage rates reported by Freddie Mac, a leading
mortgage finance company, rose for the third straight week, but remain
well below the historical norm.
For the week ending July 21, the 30-year fixed rate mortgage averaged 5.73 percent, up from 5.66 percent a week earlier. It's the highest level for the 30-year note since mid May.
The average rate on a 15-year mortgage also rose for the week, reaching 5.32 percent. It was 5.25 the week before.
Meanwhile, consumers can still get an adjustable rate mortgage at 4.42 percent.
"Even though long-term rates rose for the third consecutive week, they still remain below six percent -- still relatively close to the phenomenally low rates we experienced in June of 2003," Frank Nothaft, Freddie Mac vice president and chief economist, said.
Nothaft also said he believes the housing industry will remain active because the economy will continue to expand. He added that he believes mortgage rates will remain "affordable."
In testimony before Congress during the week, Federal Reserve Board Chairman Alan Greenspan said an improving economy should have resulted in much higher interest rates, that would have the result of cooling the red hot housing market. The Fed chief expressed some surprise that hasn't happened.
"This decline in long-term rates has occurred against the backdrop of generally firm U.S. economic growth, a continued boost to inflation from higher energy prices, and fiscal pressures associated with the fast approaching retirement of the baby-boom generation," Greenspan observed.
"The drop in long-term rates is especially surprising given the increase in the federal funds rate over the same period. Such a pattern is clearly without precedent in our recent experience."
