Credit worries, economic news help push mortgage rates s higher

NORTH PALM BEACH — Better-than-expected economic news and concerns over credit quality pushed mortgage rates up slightly to 6.34 percent, according to Bankrate.com's weekly national survey of large lenders.

The average 15-year fixed rate mortgage increased to 6.04 percent. The average jumbo 30-year fixed rate inched higher to 7.05 percent. Adjustable mortgage rates were mixed, with the average one-year ARM rising to 6.07 percent, and the average 5/1 ARM sinking to 6.18 percent.

While the October employment report showed 166,000 new jobs, concerns over the prevalence of bad loans that was the primary force driving mortgage rates higher.

 The uncertainty about the credit quality of loans made to subprime borrowers and borrowers with limited documentation is giving investors reason to command higher returns, even on loans made to creditworthy home buyers and refinancers.

As a result, mortgage rates moved higher as benchmark Treasury yields declined, adding additional risk premium into mortgage-backed bonds.

Fixed mortgage rates remain the most attractive option for borrowers Rates are almost unchanged versus from year-ago levels.
At 6.34 percent, a $200,000 loan carries a monthly payment of $1,243.17.

 Survey results:

     30-year fixed: 6.34 percent, up from 6.29 percent last week (avg. points: 0.38);

     15-year fixed: 6.04 percent, up from 5.99 percent last week (avg. points: 0.32)
       5/1 ARM: 6.18 percent, down from 6.22 percent last week (avg. points: 0.27)

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.
Meanwhile, Bankrate's weekly forward-looking Rate Trend Index indicates a mixed forecast over the next 30 to 45 days. The panel of mortgage experts predicts which way the rates are headed over the next 30 to 45 days. Half the panel forecasts a continued increase in rates, while the other half is split, with 29 percent predicting a decline and 21 percent expecting mortgage rates to remain unchanged.