U.S. 30, 15-year mortgage rates up for 7th week

Thu Mar 31, 2005 01:06 PM ET

WASHINGTON, March 31 (Reuters) - U.S. interest rates on 30- and 15-year mortgages rose for the seventh consecutive week as inflation pushed home borrowing costs higher, according to a report issued on Thursday by mortgage finance company Freddie Mac.

U.S. 30-year mortgage rates rose to an average of 6.04 percent in the week ended March 31 from 6.01 percent a week earlier. Last week, 30-year mortgages topped 6 percent for the first time since July 2004.

Fifteen-year mortgages rose in the week to an average of 5.58 percent from 5.56 percent.

One-year adjustable rate mortgages (ARM) averaged 4.33 percent, up from 4.24 percent last week. The increase in the one-year ARM brought it to its highest level since 4.35 percent in the September 6, 2002, week.

A year ago, 30-year mortgage rates averaged 5.52 percent, 15-year mortgages 4.84 percent and the ARM 3.46 percent.

"Financial markets currently are very inflation sensitive, putting upward pressure on mortgage rates," Frank Nothaft, vice president and chief economist, said in a statement. "However, several economic indicators suggest that the economy isn't overheating and that inflation is relatively contained."

On Wednesday the Commerce Department said U.S. gross domestic product grew at a 3.8 percent annual pace in the fourth quarter of last year, the same as estimated a month ago. That was slightly under the 4 percent pace Wall Street analysts had forecast but still reflected healthy growth.

Wall Street will be keeping close watch on Friday's employment report to gauge the health of the job market and the overall growth of the U.S. economy.

U.S. employers likely added about 220,000 jobs in March, notching another strong month of hiring after a hefty 262,000 gain in February.

Freddie Mac said lenders charged an average of 0.7 percent in fees and points on 30- and 15-year mortgages and 0.8 percent on the one-year ARM, all unchanged from last week.

Freddie Mac also said the hybrid "5/1" ARM, set at a fixed rate for five years, then adjustable each year following, averaged 5.43 percent, up from 5.35 percent last week.

Freddie Mac is a mortgage finance company chartered by Congress that buys mortgages from lenders and packages them into securities for investors or holds them in its own portfolio.