Rising Mortgage Rates Seen Returning Housing Market to More Normal Levels

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[tag]Freddie Mac[/tag] today released the results of its Primary Mortgage Market SurveySM (PMMSSM) in which the 30-year fixed-rate mortgage (FRM) averaged 6.78 percent, with an average 0.5 point, for the week ending June 29, 2006, up from last week’s average of 6.71 percent. Last year at this time, the 30-year FRM averaged 5.62 percent. The 30-year FRM has not been higher since May 24, 2002, when it averaged 6.81 percent.

“Financial markets continue to expect more rate hikes by the Fed over the next six months, which has added upward pressure on mortgage rates,” said Frank Nothaft, Freddie Mac vice president and chief economist. “With higher interest rates, the housing market has begun a gradual and orderly reversion towards historical norms. For instance, new construction, home sales and house price appreciation have all been slowing over the past few months.”

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