Freddie Mac Reports Mixed Reaction for Rates

Mortgage rates went in both directions this week as investors mulled over recently released data on inflation and housing construction.

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According to Freddie Mac's ""Primary Mortgage Market Survey"":http://www.freddiemac.com/pmms/, the 30-year fixed-rate mortgage (FRM) averaged 3.37 percent (0.7 point) for the week ending December 20, up from the previous week's 3.32 percent. On the other hand, the 15-year fixed average eased down a bit, falling one basis point to 2.65 percent (0.7 point).

Both measures remain near their record lows of 3.31 percent and 2.63 percent, respectively.

Interest rates on adjustable-rate mortgages (ARMs) showed similar mixed movements. The 5-year Treasury-indexed hybrid ARM averaged 2.71 percent (0.7 point) this week, up slightly from 2.70 percent previously. The 1-year ARM averaged 2.52 percent (0.4 point), falling back from 2.53 percent.

While Freddie Mac reported mostly muted rate movement, other sources saw much more activity. ""Bankrate's"":http://www.bankrate.com/ weekly national survey of mortgage rates saw its biggest week-to-week increase since March, with the benchmark 30-year fixed averaging 3.62 percent--a 10-basis point jump. The average 15-year fixed rate also increased (though more modestly), rising four basis points to 2.89 percent.

Meanwhile, the 5-year ARM rose four basis points to 2.78 percent, its highest level since August.

Only 16 percent of ""analysts"":http://www.bankrate.com/news/rate-trends/mortgage.aspx approached for the December 13 survey predicted a rise in rates; the remainder were split evenly between ""down"" and ""unchanged."" This week, 67 percent of panelists anticipate a rate increase as investors approach the year's end on a hopeful note, Bankrate doesn't seem to think the spike will last.

""While this newly announced bond-buying program is designed to keep long-term interest rates and mortgage rates low, the initial reaction was opposite because of concerns that the Fed's printing of more money would eventually lead to higher inflation. Not to worry, however, as the fiscal cliff issue is still at center stage and as year-end draws closer without an agreement, that is likely to push bond yields and mortgage rates back down,"" Bankrate said in a release.