Friday, June 8, 2007

Mortgage rates highest in 10 months

Mortgage rates rose again the week ending June 7th, says a report by Freddie Mac. The 30-year fixed-rate mortgage is at 6.53, the highest reading for this year, and the highest since August 2006. Rising rates reflect strong job growth, but they certainly won’t be luring new buyers to the Real Estate market. Which, in turn, means that sellers will have to cut prices further and “the housing slump” will last for quite some time. Until the end of 2007 at the least, according to most forecasts.

The situation is exacerbated by record-high inventories of unsold homes, so it’s clearly going to take a while for the market to get back to normal. In fact, it seems that no one has a reliable estimation of the unsold homes on the market, but all analysts point out that there are too many homes for too few buyers. The Fed, however, is concerned about inflation, so rate cuts are unlikely. The Mortgage Bankers Association (MBA) believes mortgage rates will reach 7% by the end of the year. No wonder mortgage applications are dropping.

This is how the rest of the mortgage loans performed this week: 15-year fixed-rate mortgages averaged 6.22%, the 5-year adjustable-rate mortgage was at 6.24 and one-year ARMs carried an interest rate of 5.65. All interest rates were up 0.05% to 0.10%.

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