Mortgage Rates Climb Again
Rates on 30-year mortgages climbed for the second straight week, but remain near the lowest level in decades.
The average rate for 30-year fixed loans this week was 4.37 percent, mortgage buyer Freddie Mac said Thursday. That's up from 4.35 percent a week earlier and 4.32 percent the previous week, which was the lowest level on records dating back to 1971.
The average rate on 15-year fixed loans dropped to 3.82 percent. That was the lowest on records dating back to 1991 and was down from 3.83 percent last week.
Rates have been at or near the lowest level in decades since spring as investors worried about the state of the economy and moved money into safe Treasury bonds. That lowered those yields, which mortgage rates tend to track.
But recent economic data have given investors less reason to worry. First-time claims for jobless benefits have fallen in three of the past four weeks. And in August retail sales rose modestly and factory output grew for the 12th time in 14 months.
The improving economic outlook may have prompted some investors to pull their money out of the bond market and put it back into stocks.
But it hasn't helped the housing market, nor have low mortgage rates. Home sales plummeted this summer and economists don't expect that to change until the unemployment rate falls significantly and credit becomes more accessible to potential buyers.
Applications for new home loans fell by nearly 9 percent last week from a week earlier, the Mortgage Bankers Association said Wednesday.
Meanwhile, foreclosures are surging. Lenders took back more homes in August than in any month since the start of the U.S. mortgage crisis, foreclosure listing firm RealtyTrac Inc. said Thursday.
In all, banks repossessed 95,364 properties last month, up 3 percent from July and an increase of 25 percent from August 2009, RealtyTrac said.
Some in the mortgage industry believe that rates could fall again.
"Rates will remain where they're at, and possibly dip to new lows, based on the weakness of the economy," said A.W. Pickel, chief executive of LeaderOne Financial, a mortgage lender in Overland Park, Kan.
To calculate average mortgage rates, Freddie Mac collects rates from lenders around the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a given day.
Rates on five-year adjustable-rate mortgages averaged 3.55 percent, down from 3.56 percent a week earlier. Rates on one-year adjustable-rate mortgages fell to an average of 3.4 percent from 3.46 percent.
The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount. The nationwide fee for loans in Freddie Mac's survey averaged 0.7 a point for 30-year and 1-year mortgages. The average fee was 0.6 of a point for 15-year and 5-year mortgages.
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