Mortgage Rates Hit 31-Month High

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The national average interest rate on a fixed 30-year loan hit 6.43%, up from 6.35% a week ago. A year ago, the average was 5.93%. This week's average rate is the highest rate since the week of Sept. 4, 2003, when rates hit 6.44%.

The national average interest rate on a fixed 30-year loan hit 6.43%, up from 6.35% a week ago. A year ago, the average was 5.93%. This week's average rate is the highest rate since the week of Sept. 4, 2003, when rates hit 6.44%.

Frank Nothaft, Freddie Mac's chief economist, said that the primary worry of economists is the risk of inflation.

"In the first quarter of 2006, it appears that economic growth picked up relative to the last three months of 2005," he explained. "There is concern that the continued high level of energy cost may lead to inflation in other sectors of the economy. And fear of inflation leads to higher mortgage rates, like the ones we see this week."

The average interest rate for a fixed 15-year mortgage was also up to 6.10% from 6.00% the previous week. A year ago, the 15-year mortgage rate averaged 5.38%.

Five-year hybrid ARMs averaged 6.11%, up from the previous week's 6.02%. One-year ARMs were also up to 5.57% from 5.51% the week earlier. A one-year ARM averaged 4.23% one year ago.

The 30-year and hybrid mortgages were based upon the payment of an average 0.6 point. The 15-year mortgage had an average of 0.5 point paid.

Nothaft says that the forecasts for the nation's economic growth may indicate that the Fed will continue to raise interest rates.

"Our forecast for the year as a whole is for economic growth of 3.8% in 2006, above the 3.2% in 2005, which may warrant even more Fed rate hikes than previously expected. If that is the case, mortgage rates may continue their gradual upward trend," he said.

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Martin Lukac