Mortgage Rates Rise with Economic News

Strong retail sales during January coupled with continued concerns about inflation helped push mortgage rates higher.

Bond investors were nervous of new Fed Chairman Ben Bernanke's inaugural Congressional testimony, fearing he would hint at additional Fed interest rate hikes to keep inflation under wraps. Bond yields increased, as did mortgage rates. Mortgage rates are closely related to yields on government bonds.

The average 15-year fixed mortgage rate climbed from 5.95 percent to 6.02 percent, while the average jumbo 30-year fixed rate rose to 6.58 percent from 6.51 percent. Adjustable rate mortgages increased at a similar pace, with the average 5/1 adjustable rate mortgage rising above the 6 percent mark to 6.05 percent, and the average one-year ARM moving from 5.63 percent to 5.69 percent.

Both fixed and adjustable mortgage rates increased for the fourth consecutive week. The average 30-year fixed rate mortgage increased from 6.32 percent to 6.37 percent. The 30-year fixed rate mortgages in this week's survey had an average of 0.37 discount and origination points.

Adjustable mortgage rates are now at the highest point in more than four years. The fourth consecutive weekly increase puts fixed mortgage rates at a two month high.

At this time last year, the average 30-year fixed mortgage rate was 5.62 percent, meaning that the monthly payment on a loan of $165,000 was $949.31. With the average 30-year fixed rate now 6.37 percent, the same loan would now carry a payment of $1,028.85.

Although fixed mortgage rates are higher than one year ago, the increase pales compared to the increases in interest rates and monthly payments facing adjustable rate mortgage borrowers.

Fixed mortgage rates currently represent an attractive refinancing alternative for adjustable rate borrowers.