Bankrate: Mortgage Rates Rise Due to Inflation Concerns

New York, New York, USA, 12 October 2006 -- /PRNewswire/ -- Mortgage rates rose this week following investors' concerns of inflation. The average 30-year fixed mortgage rate rose this week to 6.42%, up from 6.31%. According to Bankrate.com's weekly national survey of large lenders, the 30-year fixed rate mortgages had an average of 0.32 discount and origination points.

The average 15-year fixed rate mortgage, popular for refinancing, jumped to 6.11%, up from 6.0% last week. On larger loans, the average jumbo 30-year fixed rate climbed to 6.68% from 6.57%. Adjustable rate mortgages increased, as well. The average 5/1 adjustable rate mortgage rose to 6.23% from 6.06% and the average one-year ARM inched to 5.90% from 5.88%.

Until recently, there had been a lot of speculation on Wall Street that the Federal Open Market Committee would reduce the federal funds rate sometime in 2007 -- maybe in the first half of the year. Investors and economists figured that a rate cut in 2007 was possible because the economy is slowing, led by falling house sales and a dwindling pace of residential construction.

Don't count on a rate cut, Fed officials have said in the past week and a half. In fact, they implied, another rate increase is more likely than a decrease.

Investors took notice of the Fed bankers' warnings. Their caution about inflation -- and implicit warnings that a Fed rate cut is unlikely to happen soon -- caused bond yields to rise, and mortgage rates followed.

Fixed mortgage rates are higher than one year ago. At the time, the average 30-year fixed mortgage rate was 6.10%, meaning that the monthly payment on a loan of USD 165,000 was USD 999.89. With the average 30-year fixed rate now 6.42%, the same loan originated today would carry a monthly payment of USD 1034.25. Fixed mortgage rates are a compelling refinancing alternative for adjustable rate borrowers facing sharp payment adjustments.

SURVEY RESULTS

30-year fixed: 6.42% -- up from 6.31% last week (avg. points: 0.32)
15-year fixed: 6.11% -- up from 6% last week (avg. points: 0.31)
5/1 ARM: 6.23% -- up from 6.06% last week (avg. points: 0.29)

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.

For a full analysis of this week's move in mortgage rates, go to: http://www.bankrate.com/mortgagerates

About Bankrate, Inc.

Bankrate, Inc. (NASDAQ:RATE) owns and operates Bankrate.com, a leading Internet consumer banking marketplace. Bankrate.com is a destination site of personal finance channels, including banking, investing, taxes, debt management, and college finance. It is the leading aggregator of more than 300 financial products, including mortgages, credit cards, new and used auto loans, money market accounts and CDs, checking and ATM fees, home equity loans, and online banking fees. Bankrate.com reviews more than 4800 financial institutions in 575 markets in 50 states. In 2005, Bankrate.com had over 46 million unique visitors. Bankrate.com provides financial applications and information to a network of more than 75 partners, including Yahoo! (NASDAQ:YHOO), America Online (NYSE:TWX), The Wall Street Journal (NYSE:DJ) and The New York Times (NYSE:NYT). Bankrate.com's information is also distributed through more than 400 national and state publications. In addition to Bankrate.com, Bankrate, Inc. also owns and operates FastFind, an internet lead aggregator and MMIS/Interest.com, which publishes mortgage guides and financial rates and information.

Learn more about Bankrate management at www.bankrate.com/coinfo/staff.asp

Source: Bankrate, Inc.