Mortgage rates up as economy bodes well

WASHINGTON -- Mortgage rates climbed this week as Wall Street investors responded to some encouraging signs that the economy is gaining momentum.

Rates on 30-year, fixed-rate mortgages averaged 5.76 percent for the week ending Nov. 11, the mortgage company Freddie Mac said in its weekly survey released Thursday. That was up from 5.70 percent last week.

Rates on 30-year mortgages hit a high this year of 6.34 percent the week of May 13. After that, rates, while bouncing around, drifted lower as economic activity had cooled a bit, easing inflation fears.

Wall Street investors more recently were buoyed by a government report, issued on Nov. 5, showing the economy added 337,000 jobs in October, the most in seven months.

"October's fervent job growth statistics ... led financial markets to believe the economy is picking up steam," said Frank Nothaft, Freddie Mac's chief economist. "The end result translates into higher long-term mortgage rates this week."

Even with the increase, though, mortgage rates are still low by historical standards, analysts said.

For 15-year, fixed-rate mortgages, a popular option for refinancing, rates rose this week to 5.16 percent, up from 5.08 percent last week.

For one-year adjustable rate mortgages, rates averaged 4.16 percent this week, compared with 4 percent percent last week. The increase in rates for short-term ARMs is related to the Federal Reserve's decision on Wednesday to boost a key short-term rate by one-quarter percentage point to 2 percent.

The nationwide averages for mortgage rates do not include add-on fees known as points. Thirty-year and 15-year mortgages each carried a 0.7 point fee; one-year ARMS carried a 0.6 point fee.

Low mortgage rates have aided the housing market, which is expect to see record-high sales for all of 2004.

"Mortgage rates continue to be extremely affordable and the outlook for the housing sector appears bright," Nothaft said.

A year ago, rates on 30-year mortgages averaged 5.98 percent with 15-year mortgages at 5.31 percent and one-year ARMs at 3.73 percent.

The Mortgage Bankers Association, meanwhile, said refinancing accounted for 45.2 percent of all home mortgage loan applications filed last week, down from 45.7 percent in the previous week.