Long-Term Mortgage Rates Pushed Higher

""Freddie Mac"":http://www.freddiemac.com released the results of its ""Primary Mortgage Market Survey"":http://www.freddiemac.com/pmms/release.html (PMMS) on Thursday, which shows that interest rates increased across the board this week. According to Freddie Mac's VP and chief economist Frank Nothaft, mortgage rates followed long-term bond yields higher, with only the one-year adjustable-rate mortgage coming in lower than it was last week.
For the week ending May 28, Freddie Mac reported rates for 30-year fixed-rate mortgages (FRM) averaged 4.91 percent (0.7 point). Last week, the 30-year FRM averaged 4.82 percent, but last year at this time, it was 6.08 percent.
The average rate for 15-year FRMs in Freddie Mac's weekly study was 4.53 percent (0.7 point), up slightly from last week when they averaged 4.50 percent. A year ago at this time, the 15-year FRM was 5.66 percent.
The GSE reported that 5 -year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.82 percent this week (0.6 point). This figure is up from last week when the 5-year ARM averaged 4.79 percent. During the same week last year, the 5-year ARM was 5.62 percent.
One-year Treasury-indexed ARMs averaged 4.69 percent (0.6 point) - the only mortgage product down from last week's average of 4.82 percent. At this time last year, the 1-year ARM was 5.22 percent. According to Freddie Mac, the 1-year ARM has not been lower since the week ending September 29, 2005, when it averaged 4.68 percent.
Nothaft attributed the rise in long-term bond yields, as well as mortgage rates, to financial markets tring to discern the state of the economy. According to the National Association for Business Economics, the consensus of a recent survey of 45 professional forecasters called for the recession to end in the second half of this year, although they expect recovery to be more moderate than previously anticipated.
Still, Nothaft said, housing continues to be a drag on the nation's economy. ""Although single-family existing home sales rose 2.5 percent in April, inventories of homes for sale also rose to 9.6 months from 9.0 in March, according to the National Association of Realtors (NAR),"" Nothaft explained."" Moreover, the NAR noted that sales of distressed homes made up 45 percent of the purchases in April. Such types of sales mixed with a large supply of unsold homes keep depressing house prices.""