Rates on 30-Year Mortgages are Climbing

[Feb 6, 2008.]

 

The giant mortgage company known as Freddie Mac is reporting that rates on 30-year mortgages have increased to their highest level in 5 weeks.  The rates now average 5.72%, which is up from 5.67% the previous week.  Still, some observers are heartened by the fact that the rates remain below the 6% level.
Freddie Mac officials note that banks have been enforcing stricter credit standards, meaning that it is more difficult to obtain a loan than it used to be.

Meanwhile, rates on 15-year mortgages, which are often used for refinancing, inched up to 5.25%, up from 5.15% the previous week.  Interestingly enough, rates on 5-year, adjustable-rate mortgages dropped to 5.19%, down from 5.21% the week before.  However, rates on 1-year adjustable-rate mortgages stood steady at 5.03%, unchanged from the previous week’s rates.

Just last year, rates on 30-year mortgages were 6.30% and rates on 15-year mortgages stood at 6.03%.  At that time, 5-year adjustable-rate mortgages stood at 6.01% and 1-year adjustable-rate mortgages were at 5.52%.

The crisis within the housing market and the credit industry threaten to plunge the U.S. into a recession.  However, the Federal Reserve Board has promised to do everything it can to prevent a recession from occurring.  The Fed has consistently cut key interest rates, and more interest rate reductions are on the way.

Experts do not expect the housing market to turn around until the middle of next year.  Some forecasters say that the market will not recover until well into 2010.  The housing slump represents the worst housing situation in the U.S. in nearly 2 decades.  As a result, the housing crisis has become a key issue on the Presidential campaign trail.  In fact, it may come to pass that whoever voters think can solve the housing crisis will win the White House.