Inflation Fears Push Interest Rates Up

Average rates on mortgages increased across the board this last week,” reported Frank Nothaft, Freddie Mac vice president and chief economist. He pointed to recent economic data, including the Producer Price Index – a measure of wholesale inflation, which increased 1.1 percent in March, nearly double the consensus expectations – for raising inflationary concerns in the capital markets. “March’s index of leading indicators showed a tepid increase of 0.1 percent, after five consecutive months of decline. As a result, trading of federal funds futures contracts implied a reduced likelihood of a substantial rate cut at the next Federal Open Market Committee meeting,” Nothaft said.
After all was said and done, the 30-year fixed-rate mortgage averaged 6.03 percent with 0.3 point for the week ending April 24, 2008, up from last week when it averaged 5.88 percent.  Last year at this time, the 30-year FRM averaged 6.16 percent. The five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 5.68 percent this week, with an average 0.5 point, up from last week when it averaged 5.48 percent. It was still down slightly from a year ago, the 5-year ARM averaged 5.88 percent.