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Bankrate: Mortgage Rates Hold Steady

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Fixed mortgage rates are closely related to yields on long-term government bonds
Fixed mortgage rates are closely related to yields on long-term government bonds

RISMEDIA, September 1, 2006?After five weeks of declines, fixed mortgage rates were basically unchanged this past week in anticipation of several economic indicators, according to (www.Bankrate.com) Bankrate.com’s ?s weekly mortgage survey of large lenders.

The average 30-year, fixed-rate mortgage was 6.49%, compared with 6.48% the previous week, while the average 15-year, fixed-rate mortgage had a rate of 6.2%, vs. 6.19%, a week earlier.

On larger loans, the average jumbo 30- year, fixed-rate dropped to 6.73% from 6.74%. The average 5/1 adjustable-rate mortgage fell to 6.22%, from 6.24%, and the average one-year ARM fell to 5.98% from 6%, the first time one-year ARMs have been below 6% since June 14.

One week after hitting a five-month low, mortgage rates were largely unchanged as financial markets awaited several key economic indicators this week. The releases scheduled for this week include a revision to second quarter economic growth, an important gauge of the manufacturing sector, and the August employment report. Recent evidence of slower economic growth helped bring fixed mortgage rates to that five-month low.

With the negative economic news seemingly priced in, any indication that the economic glass is half-full rather than half-empty could see bond yields and fixed mortgage rates rise from current levels.

Fixed mortgage rates are still nearly one-half of a percentage point lower than when the Fed last hiked rates at the end of June. At the time, the average 30-year fixed mortgage rate was 6.93%, meaning that the monthly payment on a loan of $165,000 was $1,090.

With the average 30-year fixed rate now 6.49%, the same loan originated today would carry a monthly payment of $1,041.83. Fixed mortgage rates remain an attractive refinancing alternative for adjustable rate borrowers facing sharp payment adjustments.

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