PHILADELPHIA (MarketWatch) -- Mortgage rates edged higher for a third straight week, Freddie Mac said Thursday, with the national average on the benchmark 30-year, fixed-rate loan hitting 6.42%, up from 6.37% a week earlier. The rate remains below its year-ago level of 6.67%.
In its weekly survey, the mortgage agency said it found 15-year, fixed-rate mortgages, a popular choice for refinancing, averaged 6.12% across the country, up from 6.06%. A year ago the 15-year was at 6.26%.
Five-year, Treasury-indexed hybrid adjustable-rate loans jumped to an average 6.19% from 6.02% a week earlier. That put the hybrid close to its year-ago average of 6.26%. One-year, Treasury-indexed ARMs, however, moved lower this week, averaging 5.57% versus 5.64%. A year ago the one-year ARM average 5.68%.
The 30-year and 15-year loans required the payment of an average 0.4 point to achieve the rate; the hybrid needed 0.5 point and the ARM 0.6 point. A point is 1% of the loan amount, charged as prepaid interest.
"Interest rates on fixed-rate mortgages increased further this week following stronger growth in orders for durable goods," said Frank Nothaft, Freddie Mac chief economist. "Recent reports have indicated that economic growth outside of the housing market remains robust, with a healthy consumer sector and improving business spending." See the latest GDP revision.
The housing market, though, has shown few signs that it has hit bottom. Check the latest home-sales numbers.
"April's total home sales (including condominiums and co-ops) were below the pace of last year, and the S&P/Case-Shiller 20-market composite index shows home values off by 1.4% over the year ending March," Nothaft said. Read about the home-price drop.
Overall, mortgage rates are not holding back housing, said Bernard Markstein, vice president of forecasting and analysis for the National Association of Home Builders. Rates remain historically low and even though they are up a percentage point or so from their lows in 2003, they are well below the 8% level of early this decade when the housing boom began, he pointed out.
The main problem for housing, he said Thursday in a presentation to the National Association of Real Estate Editors here, is that inventories of homes for sale remain stubbornly high. That is particularly a problem for home builders.
"Housing completions continued to climb even as sales dropped [in 2006]. That leaves a lot of excess inventory that has to be worked off," he said.
Cancellation rates on new-home orders placed with the nation's largest home builders also remain elevated at close to 9% of all signed contracts, according to an NAHB survey; the historical average is closer to 5%.
The problem there, Markstein said, is that buyers are getting preapproved for mortgages to buy those houses but in many cases are finding that once they have signed the contract and gone back to the lender for final approval the lenders are pulling back on the approval, saying that they have had to tighten standards.
"That is a fallout from the subprime mortgage problems, and some of that is spilling over into the prime market," he said.
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