| Home equity products
Rates: 7.83 percent (line of credit); 7.56 percent (loan)
Rates on home equity lines of credit rocketed higher following
the latest Fed hike. The average HELOC rate soared from 7.66 percent
to 7.83 percent, a five-year high. This also represents a night-and-day
difference from the average of 4.59 percent that prevailed exactly
two years ago this week. By contrast, the average fixed rate home
equity loan held steady at 7.56 percent this week. Don't expect
the rate to hold at that level, however, as the recent increase
in long-term interest rates will ultimately push home equity loan
rates higher. But the gap between variable-rate lines of credit
and fixed-rate home equity loans that is currently more than one-quarter
percentage point will continue to grow in the next few weeks,
as another Fed hike is expected May 10.
Mortgages
Rate: 6.51 percent (30-year fixed) Average Points: 0.32
Fixed mortgage rates climbed again, with the average 30-year fixed
rate mortgage rising to 6.51 percent, the highest since July 2002.
The average 15-year fixed rate mortgage popular for refinancing
stepped up to 6.17 percent, and the average jumbo 30-year fixed
rate jumped from 6.64 percent to 6.68 percent. Adjustable rate
mortgages also posted increases, with the average 5/1 adjustable
mortgage rising from 6.13 percent to 6.17 percent, and the average
one-year ARM notching higher from 5.77 percent to 5.83 percent.
Mortgage rates hit the highest point in nearly four years as bond
investors come to grips with the idea that short-term interest
rates are headed even higher and the economy is still firing on
all cylinders. In addition, an inflation gauge often used by the
Fed showed a strong advance during the fourth quarter of 2005,
rising at a 3.5 percent annualized pace. This is not the type
of news that will get the Fed to stop raising interest rates.
Despite the latest increase in fixed mortgage rates, the difference
between short-term interest rates and the long-term interest rates
that dictate mortgage rates remains scant. Home shoppers are likely
to see continued increases in mortgage rates during the coming
months. |
