Debt Fears Send Mortgage Rates Inching Up

July 29, 2011

The 30-year fixed-rate mortgage, a popular choice among home buyers, was up slightly this week amid growing concerns over a possible U.S. debt default next week, which has already been casting fears across financial markets. If the U.S. debt does default on its obligations, analysts say it could send mortgage rates soaring.

"Industry analysts have made it clear that if the United States defaults and the national debt is downgraded, mortgage rates could spike immediately," Bankrate said in a mortgage rate report. "But the uncertainty over what Congress will decide over the next few days has already started to shake the mortgage world, as investors question if it's still safe to invest in U.S. bonds." reported the 30-year fixed-rate mortgage rising to 4.74 percent this week from 4.68 percent the previous week. The 15-year fixed-rate mortgage increased only slightly to 3.83 percent from 3.82 percent last week. 

However, Freddie Mac reported less change among mortgage rates in its weekly report. Freddie Mac reported the following rates for the week ending July 28:

  • 30-year fixed-rate mortgages: averaged 4.55 percent, up from last week’s 4.52 percent. Last year at this time, 30-year rates averaged 4.54 percent. 
  • 15-year fixed-rate mortgages: averaged 3.66 percent, which is the same as last. A year ago, the 15-year rate mortgage averaged 4 percent.
  • 5-year adjustable-rate mortgages: averaged 3.25 percent this week, down slightly from last week’s 3.27 percent average. Last year at this time, the 5-year ARM averaged 3.76 percent.
  • 1-year ARM: averaged 2.95 percent, which is down from last week’s 2.97 percent average. A year ago, the 1-year ARM averaged 3.64 percent. 

Source: “Fixed-Rate Mortgages Edge Up on Debt Ceiling Fears,” HousingWire (July 28, 2011) and “30-Year Fixed-Rate Mortgage Follows Treasury Yields Higher,” Freddie Mac (July 28, 2011)

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