Fueled by investors’ skittishness over the declining housing market, the interest rates charged for new mortgages continue their climb, even after the Fed slashed short-term interest rates.
The average overnight rate for a 30-year fixed-rate home loan currently sits at 5.47%, up more than 20 basis points from late January’s two-year low of approximately 5.25%, according to Bankrate.com. The cost of a 15-year fixed mortgage stands at nearly 4.95%, also up more than 15 basis points from January’s two-year low of 4.79%. One basis point equals one one-hundredth of a percent.
Market observers say that increasing foreclosures, the rising cost of insuring mortgage-backed securities, and even the Federal Reserve Bank’s own rate cuts are giving many mortgage-bond investors pause, pushing home-loan rates higher.
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