Rates on 30-year mortgages rise for third consecutive week in December

Rates on 30-year mortgages rose for a third straight week as investors viewed improving economic reports as a sign that the Federal Reserve will not quickly cut interest rates.

Mortgage giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages averaged 6.18 percent last week. That was up from 6.13 percent the previous week. However, it was still well below the high-point for this year which was 6.80 percent back in July.

The increases in recent weeks came after a prolonged slide in rates which helped set the stage for a rebound in sales of both new and existing homes.

The National Association of Realtors reported Thursday that sales of previously owned homes rose by 0.6 percent in November after a 0.5 percent October increase, the first consecutive monthly sales gains since the spring of 2005. That report followed news on Wednesday that new home sales rose by 3.4 percent in November.

“The lower mortgage rates in November and early December are giving the housing market a bit of relief at year’s end,” said Frank Nothaft, chief economist at Freddie Mac.

Nothaft said this week’s rise in rates reflected reports showing that consumer spending was strong in November and home sales were beginning to show evidence that the worst may be over in the housing market.

Analysts said that financial markets viewed the stronger reports as an indication that the Fed will not see the need to cut rates early next year to rescue a weakening economy.

Many economists believe the central bank will keep rates on hold until the middle of next year.

Other types of mortgage rates also showed increases this week.

Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing, rose to 5.93 percent, up from 5.89 percent last week.

Five-year adjustable rate mortgages rose to 5.98 percent, up from 5.96 percent last week while one-year ARMs saw rates increase to 5.47 percent, up from 5.44 percent last week.

The mortgage rates do not include add-on fees known as points. Thirty-year and 15-year mortgages each carried a nationwide average fee of 0.4 point. Five-year ARMs had an average fee of 0.5 point while one-year ARMs carried a fee of 0.6 point.

A year ago, rates on 3-year mortgages stood at 6.22 percent while 15-year mortgages were at 5.76 percent, five-year ARMs averaged 5.79 percent and one-year ARMs were at 5.15 percent.