Freddie Mac Reports an Increase in Mortgage Rates

Posted by Crystal Oolenbush on Monday, January 4th, 2010 at 12:16pm.

The financial experts at Freddie Mac have reported that mortgage rates have moved higher for the second week in a row. According to the report, a 30-year fixed-rate mortgage loan averaged a rate of 4.94% during the week ending on December 14, which is up from the previous week's 4.81%. This figure is still down when compared to the rate from one year ago, however, which averaged 5.19% at the time. When it comes to one-year, adjustable-rate mortgages, the rates increased to 4.34% for the week ending on December 14, which is an increase from the 4.24% rate from the previous week.

Although homebuyers certainly don't want to see the mortgage rate go up, the fact that the rates are increasing is a sign that the economy is moving in a positive direction. At the same time, it means those who are interested in getting the best rates on a home loan cannot afford to wait any longer.

"Mortgage rates followed bond yields higher once again this week amid signs of an improving economy," said Frank Nothaft, who is the chief economist of Freddie Mac, in a Biz Journals article.

Due to the fact that long-term mortgage rates have remained below the 5% mark for seven weeks in a row, the industry has been experiencing an increase in refinance activity. In fact, Mortgage Bankers Association reports that three out of every four mortgage applications received during the first two weeks of December were actually applications requesting to refinance an existing mortgage rather than to purchase a new home.

This is not to say that new mortgage loans are not being issued or that new housing starts are not on the rise. In fact, experts have also reported that November housing starts were up by 8.9% when compared to October. Furthermore, the number of building permits issued was also up by 6% in November when compared to October. So, for those who have been patiently waiting for signs of an economic recovery, it looks like the time has finally come. Although there is still a long way to go, it is good to know that things appear to be on the right track.

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