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 percent, meaning that the monthly payment on a loan of $165,000 was $999.89. With the average 30-year fixed rate now 6.42 percent, the same loan originated today would carry a monthly payment of $1034.25. Fixed mortgage rates are a compelling refinancing alternative for adjustable rate borrowers facing sharp payment adjustments.
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.
