Newspaper article THE JOURNAL RECORD

Interest Rate Hike Casts No Cloud over Mortgage Rates

Newspaper article THE JOURNAL RECORD

Interest Rate Hike Casts No Cloud over Mortgage Rates

Article excerpt

Associated Press

NEW YORK _ Mortgage rates moved marginally higher after the Federal Reserve tightened credit last week, but homebuyers can still can get relatively good deals since loan rates remain near historic lows.

"It's not a huge increase. The rates are still generally low," Robert Van Order, chief economist for the Federal Home Loan Mortgage Co., said Tuesday.

The rate on the popular 30-year fixed-rate loan has risen about a quarter percentage point to 7.29 percent since Friday, according to HSH Associates, a Butler, N.J.-based mortgage research firm. The rate on one-year adjustable rate mortgages rose from 4.20 percent to 4.43 percent, the firm said.

The moves followed Friday's announcement by Fed Chairman Alan Greenspan that the central bank increased a key measure of short-term rates for the first time in five years.

The Fed nudged the federal funds rate _ the interest banks charge each other for overnight loans _ up 0.25 percentage point to a target of 3.25 percent. It described the move as an attempt to tame inflationary pressures in the economy.

Bankers felt mortgage rates already had hit bottom _ the 30-year rate had hit a 25-year low of 6.74 percent in October. Even after the Fed move, many bankers predicted rates should remain fairly stable, fluctuating in the 7.5 percent to 8 percent range.

"The worst we're expecting this year would be 8 percent. If you told people three years ago that they'd be getting an 8 percent mortgage, they'd come screaming out of the woodwork," said Keith T. Gumbinger, an analyst with HSH Associates.

Some bankers said it was too early to judge the effects of the Fed's decision, while others reported a definite increase in business following the news from buyers who wanted to lock in rates before they rise further.

Rick Cossano, executive vice president of Countrywide Funding of Pasadena, Ca. …

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