Mortgage Rates Head Upward for First Time in Five Weeks

The freefall for mortgage interest rates hit a pause this week. Rates on 30-year mortgages rose for the first time in five weeks, according to data released by ""Freddie Mac"":http://www.freddiemac.com/pmms/release.html?week=42&year=2010&display=release Thursday, while 15-year rates also inched up.

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The GSE reports that the 30-year fixed-rate mortgage averaged 4.21 percent (0.8 point) for the week ending October 21, up from last week's average of 4.19 percent.

The 15-year fixed-rate mortgage this week came in at 3.64 percent (0.7 point). Last week, Freddie recorded the 15-year average as 3.62 percent.

Adjustable-rate mortgages (ARMs), on the other hand, headed lower in Freddie Mac's survey, hitting new record lows.

The 5-year ARM dropped from 3.47 percent last week to 3.45 percent (0.6 point). The average rate for a 1-year ARM plunged from 3.43 percent to 3.30 percent (0.7 point) this week.

Frank Nothaft, Freddie Mac's VP and chief economist, says mixed inflation signals kept fixed mortgage rates at bay this week. ""The headline producer price index jumped 0.4 percent between August and September, which was quadruple the market consensus, while the consumer price index fell below the market forecast,"" Nothaft explained.

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Freddie Mac’s survey results are based on rate data collected from about 125 lenders across the country, including thrifts, credit unions, commercial banks, and mortgage lending companies.

According to a separate ""Bankrate study"":http://www.bankrate.com/finance/mortgages/record-low-rates-keep-falling.aspx big lenders are still experiencing rate drops, as compared to the larger pool of institutions in Freddie’s survey. Bankrate’s report is based on data gathered from the top 10 banks and thrifts in the top 10 U.S. markets.

The tracking company’s account shows mortgage rates hit another record low this week, with the average rate on the benchmark conforming 30-year fixed mortgage retreating to 4.42 percent (0.35 point). That’s down from 4.47 percent in Bankrate’s study last week.

The average 15-year fixed mortgage slipped to 3.82 percent, and the larger jumbo 30-year fixed rate dipped to 5.08 percent, both record lows, Bankrate said.

Adjustable rate mortgages hit new lows also, with the average 5-year ARM declining to 3.6 percent and the average 7-year ARM inching down to 3.85 percent.

Bankrate said in its report, “While the Federal Reserve is poised to resume a bond purchase program designed to push interest rates lower, don't assume this will automatically translate into lower mortgage rates. Why? Such an announcement is widely expected and much of its intended impact may already be reflected in government bond yields and mortgage rates.”

The company says the ongoing foreclosure controversy surrounding court documents and paperwork errors is sure to raise both the cost and the amount of time involved in foreclosure, factors that could ultimately be passed along to future borrowers through higher mortgage rates.