30-year mortgages jump after 5 weeks of declines

[September 26, 2008]  WASHINGTON (AP) -- Rates on 30-year mortgages, which had been falling for five weeks, jumped sharply this week, reflecting the turbulence in global credit markets.

Freddie Mac reported Thursday that its nationwide survey found that the average for 30-year, fixed-rate mortgages rose to 6.09 percent this week, up from 5.78 percent last week. Last week's rate had been the lowest level for 30-year rates since February.

The increase, which pushed rates above 6 percent for the first time since early September, was blamed on turbulent financial markets, which in recent weeks have been hit by the biggest upheavals on Wall Street since the Great Depression.

"Mortgage rates followed Treasury bond yields higher this week amid market uncertainty over the current state of the economy," said Freddie Mac chief economist Frank Nothaft.

The big declines in mortgage rates before this week were attributed in part to the government's announcement on Sept. 7 that it was taking over Fannie Mae and Freddie Mac following huge losses the companies experienced because of soaring defaults on mortgage loans, reflecting the deep slump in housing.

In a nationally televised address Wednesday night, President Bush urged Congress to quickly pass a $700 billion rescue package for the nation's financial system. Key House and Senate lawmakers said Thursday that they had reached an agreement in principle on the major parts of the plan.

The Freddie Mac survey showed that other mortgage rates rose this week as well.

Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing, rose to 5.77 percent, up from 5.35 percent last week.

Rates on five-year, adjustable-rate mortgages averaged 6.02 percent this week, up from 5.67 percent last week.

One-year, adjustable-rate mortgages rose to 5.16 percent, up from 5.03 percent last week.

The mortgage rates do not include add-on fees known as points. The nationwide fee for 30-year mortgages averaged 0.7 point. The average fee for 15-year and five-year mortgages was 0.6 point while the fee on one-year mortgages was 0.5 point.

A year ago, rates on 30-year mortgages stood at 6.42 percent, 15-year mortgage rates averaged 6.09 percent, five-year adjustable-rate mortgages were at 6.15 percent and one-year adjustable-rate mortgages stood at 5.60 percent.

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On the Net:

Freddie Mac: http://www.freddiemac.com/

[Associated Press; By MARTIN CRUTSINGER]

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