Stephen Reddell's Katy Texas Blog

Freddie Mac anticipates refi slowdown

Thursday, February 28, 2008

Inman News

Mortgage rates were up again this week, Freddie Mac reported today, as concerns about inflation and continued turmoil in credit markets stoked the fire under long-term interest rates.

The average rate on 30-year fixed-rate mortgages jumped to 6.24 percent this week from 6.04 percent a week ago, and the average 15-year fixed mortgage gained from 5.64 percent to 5.72 percent.

Points, or fees that lenders charge for loan processing expressed as a percent of the loan, averaged 0.5 on the 30- and 15-year loans.

“Long-term fixed mortgage rates trended up for a third week, bringing rates on 30-year and 15-year fixed-rate mortgages back to their levels of last November,” Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement. “Refinancing activities, which had surged to a 12-month high in January, according to Freddie Mac’s monthly refi share report, are likely to ebb following this recent rise in rates.”

Indeed, the Mortgage Bankers Association reported Wednesday a 30.4 percent drop-off in refinancings last week.

Freddie Mac reported that average rates on five-year Treasury-indexed adjustable-rate mortgages (ARMs) rose to 5.43 percent this week from 5.37 percent last week, and average rates on one-year Treasury-indexed ARMs jumped from 4.98 percent to 5.11 percent. Points on the 5- and one-year loans averaged 0.4 and 0.7, respectively.

Many people ask me why the rates are going up if the feds have cut rates so often as of late, particularly with the Economic Stimulus Package that has recently been approved.  Well, the bottom line is this: INFLATION.  The rising cost of inflation around the country is forcing the mortgage rates up, despite the recent cuts  and attempts to help. It makes it extremely difficult to have any kind of sustained reduction in the rates. Hope this helps.

For more information about real estate issues in Katy or West Houston contact Steve Reddell. He is a licensed REMAX real estate agent in Katy Texas you can trust. You can contact him directly at 281-994-5173. You can also visit him on the web at www.katyfamilyhomes.com

Filed under: Economy/Market, Katy Family Homes, Lenders