Mortgage Rates Climb for Fourth Straight Week

Mortgage interest rates rose again this week, marking the fourth consecutive increase. Data ""released by Freddie Mac"":http://www.freddiemac.com/pmms/release.html?week=49&year=2010 Thursday shows that the average rate on a 30-year fixed mortgage jumped to 4.61 percent (0.7 point) for the week ending December 9, 2010.

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That's up from last week's average of 4.46 percent. If such sharp increments continue at this pace, the 30-year rate could rise above where it was a full year ago (4.81 percent) in a matter of mere weeks.

After seven months of declines that put the benchmark 30-year rate at a half-century low, the sudden change in direction has already dampened demand for mortgage refinancing. The Mortgage Bankers Association (MBA) ""reported Wednesday"":http://dsnews.comarticles/home-purchase-applications-rise-for-third-consecutive-week-2010-12-08 that its weekly index of refinance applications has fallen to its lowest level since June.

Analysts are also warning that a continued hike in rates could also stall the home purchase market, which is just beginning to show slight signs of a pick-up. MBA's index of applications for home purchases has risen for three weeks and is now hit its highest mark since early May.

Frank Nothaft, Freddie Mac's VP and chief economist, points out that interest rates for 30-year fixed mortgages are now almost a half percentage point higher than the

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record low set in mid-October. For a $200,000 conventional loan, he says the rise amounts to $50 more in monthly payments than if buyers had locked in rates just two months ago.

Freddie Mac’s study, which is based on data gathered from about 125 lenders across the country, tracked a rise in rates across the board.

The 15-year fixed-rate mortgage came in at an average of 3.96 percent (0.7 point) this week, up from last week’s average of 3.81 percent. A year ago at this time, Freddie says the 15-year fixed rate was 4.32 percent.

Adjustable-rate mortgages (ARMs) also jumped, with the 5-year ARM coming in at 3.60 percent (0.6 point) this week, and the 1-year ARM at 3.27 percent (0.6 point).

A separate ""study released by Bankrate"":http://www.bankrate.com/finance/mortgages/mortgage-rates-reach-6-month-peak.aspx Thursday also signaled a sharp rise in rates for every loan product tracked. The company’s weekly rate averages are based on data from the top 10 banks and thrifts in the top 10 U.S. markets.

The benchmark conforming 30-year fixed mortgage rate climbed to 4.89 percent (0.36 point) in Bankrate’s survey. It was 4.71 percent last week.

The average 15-year fixed mortgage soared from 4.07 percent last week to 4.26 percent (0.36 point). The larger jumbo 30-year fixed rate settled at 5.39 percent, up from 5.29 percent reported by Bankrate the week prior.

Adjustable-rate mortgages were mostly higher, with the average 5-year ARM climbing to 3.85 percent and the average 7-year ARM increasing to 4.22 percent.

Each week, Bankrate surveys a panel of mortgage experts for their predictions of which way rates are headed over the next seven days. In a landslide, 80 percent of the panelists are calling for continued increases in mortgage rates. Just 13 percent forecast a decline in mortgage rates, and 7 percent expect no change over the next week.