Mortgage rates on the rise again
By Holden Lewis • Bankrate.com

The benchmark 30-year fixed-rate mortgage rose 8 basis points to 6.08 percent, according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week's survey had an average total of 0.36 discount and origination points. One year ago, the mortgage index was 6.00 percent.

The 15-year fixed-rate mortgage rose 10 basis points to 5.42 percent. The one-year adjustable-rate mortgage rose 14 basis points to 4.15 percent.

After a bumpy ride in late summer, mortgage rates have steadied. In the last six weeks, the benchmark 30-year rate has gone from 6.01 percent down to 5.94 percent and back up to 6.08 percent. In the six-week period before that, the rate rose as high as 6.47 percent and as low as 5.79 percent.

Rates rose only slightly despite the second week in a row with strongly positive news about the economy. The federal government reported that nonfarm payrolls increased by 126,000 in October. The consensus among economists was that job growth would amount to about half that. The unemployment rate dropped to 6.0 percent in October from the previous month's rate of 6.1 percent. After shedding jobs each month for most of this year, the economy has added jobs for three months in a row now.

The good news about employment came the week after the government reported that the economy had grown at an annual rate of 7.2 percent from July through September.

Taken together, the strong economic reports lifted the 30-year rate just 14 basis points, when lesser news moved rates more violently in the summer.

"The data out in recent weeks, including last week, have generally exceeded even the most optimistic of expectations," FleetBoston Financial senior economist Geoffrey Somes writes in his weekly economics newsletter. He says the labor market "is clearly now on the mend," which is important because consumer confidence has been flagging.

Other economists have declared an end to the "jobless recovery," and imply that higher interest rates could follow. But when? They are loath to guess. Wachovia's economists say "interest rates will rise as investors alter their expectations about growth, inflation and the bias for monetary policy." On the other hand, they say the picture will become clearer three months from now, when Alan Greenspan, chairman of the Federal Reserve, delivers the first of his twice-a-year talks to Congress about monetary policy and his economic outlook.

Investors and economists broadly agree on one thing -- with the economic and job growth we've seen lately, interest rates are bound to rise over the next year.