Are the Days of Rock-Bottom Mortgage Rates Behind Us?

Mortgage interest rates rose dramatically this week, after lingering around half-century lows for months. The upsurge comes just two weeks after the Federal Reserve announced plans to ""purchase another $600 billion"":http://dsnews.comarticles/fed-to-buy-600b-in-securities-hold-interest-rates-low-2010-11-03 in Treasury securities, a move that is meant to hold interest rates down.
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Rates are still extremely low by historical standards, but the sharp increases seen in just one week's time â€" long-term rates jumped by about 20 basis points in two separate industry studies â€" serve as an abrupt reminder that trends can reverse on a dime and windows of opportunity, or in this case affordability, will inevitably close.

A nationwide ""survey conducted by Freddie Mac"":http://www.freddiemac.com/pmms/release.html?week=46&year=2010&display=release found that 30-year fixed-rate mortgages averaged 4.39 percent (0.9 point) for the week ending November 18. That's up from 4.17 percent last week, and the highest rate for 30-year loans recorded by the GSE since early August.

Fifteen-year fixed-rate mortgages this week averaged 3.76 percent (0.7 point) in Freddie's study. Last week, they

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were 3.57 percent. The 5-year adjustable-rate mortgage (ARM) also jumped, from 3.25 percent last week to 3.40 percent (0.7 point).

A separate ""report from Bankrate"":http://www.bankrate.com/finance/mortgages/mortgage-rates-leap-to-3-month-peak.aspx?ic_id=tsThumb1 says mortgage rates jumped this week for the second week in a row to hit three-month highs. Bankrate’s study averages rates from the top 10 banks and thrifts in the top 10 U.S. markets.

The tracking company found that the average conforming 30-year fixed mortgage rate is now at 4.62 (0.37 point) percent among its survey pool. That’s up from 4.46 percent reported by the firm last week.

The average 15-year fixed mortgage increased from 3.84 percent to 4.02 percent (0.32 point) in Bankrate’s study. The larger jumbo 30-year fixed rate soared as well to 5.24 percent.

Adjustable rate mortgages also climbed higher, with the average 5-year ARM edging up to 3.71 percent and the average 7-year ARM rising to 4.01 percent.

“Worries that the Fed's quantitative easing program will spark higher inflation, coupled with stronger economic data on retail sales and weekly unemployment filings fueled the latest increase,” Bankrate explained in its report.

Each week, Bankrate also ""surveys a panel of mortgage experts"":http://www.bankrate.com/finance/mortgages/mortgage-rate-trend-index8-157054-1.aspx to gauge the direction rates are headed over the next seven days.

More than half of the panelists, 53 percent, say mortgage rates will stay more or less the same over the next week. Thirty-three percent predict rates will decline, and the remaining 14 percent believe that mortgage rates will rise in the next week.