Bankrate: Inflation News Pushes Mortgage Rates Higher

Average 30-year fixed rate mortgage inched higher from 6.69 percent to 6.71 percent

Fixed mortgage rates increased following the release of the May Consumer Price Index, which showed inflation still lurks. The average 30-year fixed rate mortgage inched higher from 6.69 percent to 6.71 percent, according to Bankrate.com's weekly national survey of large lenders. The 30-year fixed rate mortgages in this week's survey had an average of 0.35 discount and origination points.

The average 15-year fixed rate mortgage popular for refinancing rose to 6.36 percent. On larger loans, the average jumbo 30-year fixed rate nosed upward to 6.88 percent from 6.86 percent. Adjustable rate mortgages were mixed. The average 5/1 adjustable rate mortgage dipped to 6.31 percent, and the average one-year ARM climbed to 5.94 percent. Mortgage rates have bobbed up and down over the past month, moving only slightly from one week to the next. Even a higher-than-expected increase in consumer prices barely caused a ripple in mortgage rates. The latest inflation news assures a rate hike at the Federal Open Market Committee's next meeting June 28-29. While short-term interest rates continue to rise, longer term instruments are showing little reaction. Mortgage rates are closely related to yields on long-term government bonds.

Fixed mortgage rates are considerably higher than one year ago. This time last year, the average 30-year fixed mortgage rate was 5.73 percent, meaning that the monthly payment on a loan of $165,000 was $960.80. With the average 30-year fixed rate now 6.71 percent, the same loan originated today would carry a payment of $1,065.80. Fixed mortgage rates remain an attractive refinancing alternative for adjustable rate borrowers facing sharp payment adjustments.

SURVEY RESULTS

30-year fixed: 6.71% -- up from 6.69% last week (avg. points: 0.35)

15-year fixed: 6.36% -- up from 6.31% last week (avg. points: 0.33)

5/1 ARM: 6.31% -- down from 6.32% last week (avg. points: 0.33)

Bankrate's national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in the top 10 markets.

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