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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.

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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 gangbusters.

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.

Damage limited
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.

-- Posted: Oct. 20, 2005
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National Mortgage Rates
Rates may include points.
30 yr fixed mtg 3.65%
15 yr fixed mtg 2.78%
5/1 jumbo ARM 3.81%

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