Mortgage rates up for sixth week
Mortgage rates went up for the sixth week in a row
and are at their highest level in more than a year.
The benchmark 30-year, fixed-rate mortgage rose 7
basis points to 6.17 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 0.31 discount and origination points. One year ago, the mortgage
index was 5.7 percent. Four weeks ago, it was 5.88 percent.
The benchmark 15-year, fixed-rate mortgage rose 3
basis points, to 5.72 percent. The benchmark 5/1 adjustable-rate
mortgage rose 3 basis points to 5.77 percent.
The 30-year fixed is at its highest level since Bankrate's
survey of July 28, 2004, when it was also 6.17 percent. Interest
rates have been rising across the board since fuel prices went skyward,
in response to Hurricane Katrina's disruption of oil supplies.
Rate rise doesn't cool housing passion
After more than a month of rising mortgage rates, you might think
the mortgage and housing markets would cool off. And if that's what
you believe, you would be wrong. Real estate and mortgages are going
Mortgage applications went up 6.1 percent last week, according
to the Mortgage Bankers Association. That seasonally adjusted number
is tweaked to take Columbus Day into account. Want to compare apricots
to apricots? Fine: Applications last week were up 3.7 percent compared
to the same week a year earlier, which also included Columbus Day.
Mortgage applications for home purchases were up more strongly than
applications for refinances.
Housing starts surged 3.4 percent, in September,
according to the Census Bureau. Building permits for single-family
homes were up 4.4 percent. If anything, the report underestimated
construction: The bureau says it didn't assume anything. If it didn't
get any reports from damaged permit offices, the Census assumes
no permits were issued there. If houses were destroyed and are eventually
rebuilt, those houses will count as new construction.
It's too soon for reconstruction to have begun in large numbers;
the areas affected by hurricanes Katrina and Rita are still mostly
in cleanup and repair phases.
Anyway, the worst affected areas were a small part of the country.
The areas of strongest growth were the Midwest and South. Single-family
housing starts actually declined, by 5.3 percent, in the West.
"All the fundamentals remain in place, and the overall housing
market continues to exhibit ongoing strength," says David Seiders,
chief economist for the National Association of Home Builders. "Favorable
mortgage rates, as well as strong household income and job growth,
continue to bolster housing demand."
Remember that he's talking about conditions in September, when
mortgage rates were lower, although they already were rising. Although
the economy is creating jobs and wages are rising, wages are not
keeping up with inflation. According to the Bureau of Labor Statistics,
average real weekly earnings fell
1.2 percent from August to September. The BLS says average earnings
went up 0.2 percent, but the Consumer Price Index climbed 1.4 percent.
From September 2004 to this September, average weekly earnings
fell 2.7 percent when taking inflation into account. Somehow, though,
that hasn't deterred home buyers from staking their claims, even
as mortgage rates rise.