Mortgage Rates Rise in Face of Inflation

Rates rose to their highest since December at the beginning of this week, with 30 year fixed rate mortgages leading the increase. Inflation and rising rates have been making real estate investors nervous.

Freddie Mac released news in their weekly nationwide survey that rates on the 30 year fixed rate mortgages rose to an average of 6.23% last week, making it the highest rate for that product since the week ending Dec. 22. Increasing labor costs and a decline in worker productivity are creating the threat of inflation not too far down the road. As a result of this, the long term mortgage rates offered by lenders goes up, a trait seen all too clearly in the last two weeks.

Rates had been drifting downward before then, giving hope to a stabilizing real estate industry after the craze of 2005. Though the largest difference can be seen in the 30 year term mortgages, the 15 year term, a favorite for refinancing, was up to 5.81% from last weeks 5.70%. Even adjustable rate mortgages are going up, with yearly adjustable loans going up to 5.33% and hybrid loans going from 5.75% to 5.87% in the week ending Feb. 3rd. The average point fee, an upfront charge for a lower rate, rose from 0.25 pts to 0.50 pts.