Bankrate: Mortgage rates rise as investors' fears ease

By Palm Beach Business.com

DELRAY BEACH — Mortgage rates inched higher over the past week as worries eased somewhat over global events and investors focused more on the stock market.

Freddie Mac’s  Primary Mortgage Market Survey found the 30-year-fixed-rate mortgage coming in at 4.86 percent with 0.7 point, up five basis points from the previous week. Bankrate’s national mortgage survey found a similar rise, with the 30-year averaging 5.01 percent with 0.41 point, up from 4.96 percent a week earlier.

Bankrate cited the rise in the stock market over the past week as one factor pushing mortgage rates higher. Investors tend to flee stocks in times of turmoil, such as the crises in Libya and Japan, for the relative safety of Treasury securities. That in turn tends to push down interest rates, including mortgage rates.  In more settled times, investors prefer the higher return that stocks offer, and pushes rates higher.  Last week, the Dow rose more than 3 percent.

Freddie Mac cited the low risk of inflation as helping  to suppress mortgage rates.  

"Fixed mortgage rates rose slightly for a second week in a row, but continue to remain quite low,”  Freddie Mac Chief Economist Frank Nothaft said.  “Low rates have benefited from relatively benign inflation reports. Inflation as measured by the 12-month growth in the core price index for consumer spending, a metric preferred by the Federal Reserve, is hovering near the lowest pace since 1960 when this data series began.”

Also from the surveys: the 15-year fixed-rate mortgage  rose to 4.09 percent with 0.7 point from 4.15 percent a week ago, according to Freddie Mac. Bankrate found a somewhat steeper rise, with the 15-year climbing to 4.25 percent with 0.41 point, up from 4.16 percent last week.

Bankrate’s panel of mortgage experts sees rates most likely continuing to rise over the coming week.