WASHINGTON - Rates on 30-year mortgages rose a second straight week as financial markets reacted to the decision by the Federal Reserve to keep pushing interest rates higher because of worries about inflation.
Mortgage giant Freddie Mac reported Thursday that the nationwide average for rates on 30-year, fixed-rate mortgages rose this week to 5.80 percent, up from 5.74 percent last week.
It was the second consecutive weekly increase and pushed the 30-year rate to its highest level in five weeks.
Analysts attributed the increase in part to the Fed's decision this week to boost a key short-term rate it controls for the 11th time in the past 15 months. Fed policy-makers said they believed Hurricane Katrina's impact on economic growth would be temporary and they were more concerned about the impact hurricane disruptions would have on energy prices and overall inflation.
"Mortgage rates look like they are back on track where the Fed wants them, which is gradually rising," said Frank Nothaft, chief economist at Freddie Mac.
He said his forecast calls for a cooling of the red-hot housing market next year, reflecting what he believes will be moderate increases in mortgage rates.
Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing a home mortgage, averaged 5.37 percent this week, up from 5.32 percent last week.
One-year adjustable rate mortgages rose slightly to 4.48 percent from 4.46 percent last week. In mid August, one-year ARMs hit their highest level in more than three years at 4.58 percent.
Rates on five-year hybrid adjustable rate mortgages averaged 5.31 percent this week, up from 5.26 percent last week.
The nationwide averages for mortgage rates do not include add-on fees known as points. One-year ARMs and 15-year mortgages carried a fee of 0.7 point while the 30-year mortgage had a nationwide average fee of 0.6 point and the five-year ARM carried a fee of 0.8 point.
A year ago, 30-year mortgages averaged 5.70 percent, 15-year mortgages were at 5.37 percent and one-year ARMs averaged 4 percent. Freddie Mac does not have historical data on the five-year ARM which it began tracking this year.
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Freddie Mac: http://www.freddiemac.com