Mortgage rates rise for 3rd consecutive week

Kenneth R. Gosselin, Tribune Newspapers
Posted Dec. 2, 2010 at 2:32 p.m.

After falling to jaw-dropping lows, home mortgage rates rose this week for the third week in a row, according to a new report today.

The rates on 30-year, fixed rate home loans rose to an average 4.46 percent with 0.8 point this week, up from 4.40 percent a week ago, according to the weekly survey by mortgage giant Freddie Mac. The increase comes after the 30-year, fixed-rate loan fell to a record low of 4.17 percent in early November.
Rates on 15-year, fixed-rate residential mortgages — a popular choice for refinancing — also rose to an average of 3.81 percent with 0.7 point, above last week’s average of 3.77 percent. Fifteen-year rates also logged a record low last month, touching 3.57 percent.

Despite the increases, mortgage rates still remain at attractively low levels and still well below where they were a year ago.

Mortgage rates are rising even though the housing market remains weak. Typically, rates rise as home prices and borrowing activity increases.

“Mortgage rates followed bond yields higher this week as recently released economic data suggest the economy may be stronger this quarter than the previous,” said Frank Nothaft, Freddie Mac’s chief economist.

Nothaft pointed to regional manufacturing indexes for Dallas, Chicago and Milwaukee that all rose in November. In addition, the Federal Reserve noted that “10 of its 12 regions saw improvement through mid-November in its regional economic review, released Wednesday.

However, house prices indices nationally are still on a trend downward, Nothaft said.

The 12-month growth rates in the S&P Case-Shiller 20-city index released this week shows a slowing from 1.7 percent in August to 0.6 percent in September.

“Only six of the cities had positive annual growth, compared to nine in August.

In Connecticut, house sales remain slow with the end of the home buyer tax credit program and aren’t getting much of a boost from low mortgage rates.

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