Ann Arbor Real Estate- Bankrate: Bernanke Keeps Mortgage Rates in Flux

Fixed mortgage rates are more than one full percentage point higher than one year ago

RISMEDIA, July 21, 2006—Compared to one week ago, mortgage rates inched higher on both fixed and adjustable rate loans. The average 30-year fixed rate mortgage rose to 6.89 percent from 6.87 percent last week. According to Bankrate.com's weekly national survey of large lenders, the 30-year fixed rate mortgages had an average of 0.3 discount and origination points.

The average 15-year fixed rate mortgage, popular for refinancing, increased by a similar amount to 6.49 percent. On larger loans, the average jumbo 30-year fixed rate is now 7.05 percent. Adjustable rate mortgages were no different. The average 5/1 adjustable rate mortgage notched higher to 6.55 percent, and the average one-year ARM crept higher to 6.13 percent.

Mortgage rates spent much of the past week treading water, but that all changed once Fed Chairman Ben Bernanke appeared before the Senate Banking Committee Wednesday morning. Almost immediately, Bernanke's words soothed investors concerned about the Fed raising interest rates too far. Yields on government securities started to fall, and mortgage rates declined right along with them.

Treasury yields and mortgage rates dipped sharply between 10 a.m. and 11 a.m. Eastern time as Bernanke was speaking. Bankrate.com's weekly survey was largely complete prior to rates declining.

Fixed mortgage rates are more than one full percentage point higher than one year ago. In July 2005, the average 30-year fixed mortgage rate was 5.78 percent, meaning that the monthly payment on a loan of $165,000 was $966.04.

With the average 30-year fixed rate now 6.89 percent, the same loan originated today would carry a payment of $1,085.59. Despite recent increases, fixed mortgage rates remain an attractive refinancing alternative for adjustable rate borrowers facing sharp payment adjustments.

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