Bankrate: Inflation Fears Nudge Mortgage Rates Higher

NEW YORK, Dec. 20, 2007 /PRNewswire-FirstCall

Fixed mortgage rates moved higher for the second consecutive week, with the average conforming 30-year fixed mortgage rate now at 6.21 percent. According to Bankrate.com's weekly national survey of large lenders, the average 30-year fixed mortgage has an average of 0.35 discount and origination points.

The average 15-year fixed rate mortgage popular for refinancing inched higher to 5.9 percent, and the average jumbo 30-year fixed rate to 7.26 percent. Adjustable mortgage rates were mixed, with the average one-year ARM remaining at 6.17 percent, and the average 5/1 ARM dropping to 6.21 percent.

Mortgage rates moved higher after two reports showed inflation could be an issue. In particular, both the Producer Price Index and Consumer Price Index showed larger than expected increases, even after excluding volatile energy costs. The news was enough to push bond yields and mortgage rates higher. After all, inflation is like poison to bond investors as it erodes the value of the fixed payments they receive. Mortgage rates are closely related to yields on long-term government bonds.

Fixed rate mortgages are currently the most attractive option for borrowers. Five months ago, the average 30-year fixed mortgage rate was 6.82 percent, meaning that a $200,000 loan would have carried a monthly payment of $1,306.52. Now that the average conforming 30-year fixed rate is 6.21 percent, the same $200,000 loan carries a monthly payment of $1,226.24.

SURVEY RESULTS

30-year fixed: 6.21% -- up from 6.17% last week (avg. points: 0.35)
15-year fixed: 5.90% -- up from 5.89% last week (avg. points: 0.34)
5/1 ARM: 6.21% -- down from 6.29% last week (avg. points: 0.28)


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

The survey is complemented by Bankrate's weekly forward-looking Rate Trend Index, in which a panel of mortgage experts predicts which way the rates are headed over the next 30 to 45 days. The majority of panelists indicate it makes sense to lock now, with 56 percent predicting higher rates in the next month or so. One-third of respondents feel mortgage rates could move lower and just 11 percent expect rates to remain more or less unchanged in the coming 30 to 45 days.

For the full mortgage Rate Trend Index, go to http://www.bankrate.com/RTI

About Bankrate, Inc.

Bankrate, Inc. (NASDAQ:RATE) ("Bankrate") 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. Bankrate 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 reviews more than 4,800 financial institutions in 575 markets in 50 states. In 2005, Bankrate.com had nearly 53 million unique visitors. Bankrate 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's information is also distributed through more than 400 national and state publications. In addition to Bankrate.com, Bankrate also owns and operates Bankrate Select, an Internet lead aggregator and Mortgage Market Information Services, Inc. and Interest.com, Inc., each of which publishes mortgage guides and financial rates and information.

Source: Bankrate, Inc.