Rates Rise on Inflation Worries

The Freddie Mac Primary Mortgage Market Survey for the week ending March 30, 2006 finds the 30-year fixed-rate mortgage averaging 6.35%, up from last week's average of 6.32%.Last year at this time, the 30-year FRM averaged 6.04%. The average for the 15-year FRM this week is 6.00%, up 3 basis points; five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 6.02%, up 6 basis points; and the one-year Treasury-indexed ARMs averaged 5.51%, up 10 basis points. "The Fed raised rates this week, as was expected, but the market was a little surprised at the committee's comments, which implied more tightening in the future," said Frank Nothaft, Freddie Mac vice president and chief economist. "That raised the expectation that inflation may be more of a threat than was previously thought, and that kind of thinking promotes upward pressure on mortgage rates like we saw across the board this week."