WASHINGTON -- Rates on benchmark 30-year mortgages climbed for the fifth week in a row, rising this week to the highest level since the middle of January, a trend that is slowing -- but not stopping -- refinancing activity.
The average rate on 30-year fixed-rate mortgages for the week ending July 25 was 5.94 percent, up sharply from last week's rate of 5.67 percent, Freddie Mac, the mortgage giant, reported Thursday in its weekly nationwide survey.
This week's rate marked the highest since the week ending Jan. 17, when rates on 30-year mortgages averaged at 5.97 percent.
In the middle of June, rates on 30-year mortgages slid to a new weekly low of 5.21 percent, the lowest level seen in more than four decades.
Several factors have contributed to the recent rise in mortgage rates, economists said. They include: signs that the economy is gaining traction; concern about swelling federal budget deficits; and disappointment on Wall Street that the Federal Reserve didn't make a bolder cut to short-term rates on June 25. Those factors have pushed bond rates up, causing long-term mortgage rates to rise.
For 15-year fixed-rate mortgages, a popular option for refinancing, rates jumped to 5.27 percent this week, up from 5 percent last week. This week's rate matched the rate for the week ending Feb. 7.
Rising mortgage rates "may start to apply the brakes to the frenzy of refinancing that we are currently experiencing," said Frank Nothaft, Freddie Mac's chief economist. "Purchases of homes remain strong, though."
Rates for one-year adjustable mortgages also moved higher this week, rising to 3.67 percent, compared with 3.58 percent last week.
This week's mortgage rates do not include add-on fees known as points. Thirty-year loans carried an average fee of 0.4 point; fifteen-year and one-year adjustable mortgages had an average fee of 0.5 point.
A year ago, rates on 30-year mortgages averaged 6.34 percent, 15-year mortgages were 5.76 percent and one-year adjustable mortgages stood at 4.31 percent.
The recent rise in mortgage rates is taking some steam out of a refinancing frenzy. Still, refinancing activity remains healthy, economists said.
Refinancing activity accounted for 68.7 percent of all mortgage loan applications filed last week, down from 70.1 percent the week before, the Mortgage Bankers Association of America reported.
Refinancing is an important factor underpinning consumer spending, the main force keeping the economy going. Extra cash or savings coming from refinancing deals along with rising home values are helping to offset the negative force of a sluggish job market.
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