Mortgage rates inch upwards

Best mortgage companies

By Greg McBride, CFA
Bankrate.com

In a week devoid of any significant economic news, mortgage rates did a whole lot of ... well, nothing. - advertisement -

The benchmark 30-year, fixed-rate mortgage rose a whole 0.01 percent to 6.32 percent, according to the Bankrate.com national survey of large lenders. The mortgages in this week's survey had an average total of 0.33 discount and origination points. One year ago, the mortgage index was 6.37 percent; four weeks ago, it was 6.26 percent.

The 15-year, fixed-rate mortgage also rose 0.01 percent to 6.09 percent. The 5/1 adjustable-rate mortgage did the same, rising 0.01 percent to 6.18 percent.

The mortgage waters were calm as there wasn't much in the way of market moving economic reports on tap. The past week was one of anticipation for Federal Reserve Chairman Ben Bernanke to make his semiannual appearance before Congress to testify on the economy and monetary policy.

Even after Bernanke appeared before the Senate Committee on Banking, Housing and Urban Affairs on Wednesday morning, he did little to rock the boat. The past two months have seen plenty of indicators that the economy is performing well, so well that any need for a Fed rate cut is out the window. While faster economic growth raises the prospects for a Fed rate hike to slow inflation, that possibility has been kept at bay by evidence of moderating inflation.

In his Senate testimony, Bernanke said the recent economic data indicates that current interest rates are "likely to foster sustainable economic growth and a gradual ebbing of inflation." Mortgage rates are closely related to yields on government and mortgage-backed bonds. For investors in those bonds, inflation is public enemy No. 1.

Bernanke's comments could foretell good news for mortgage rates in coming weeks if investors see further evidence that inflation is cooperating. Such news usually corresponds with falling mortgage rates. However, Bernanke's words were too little too late to affect the mortgage rates in this week's Bankrate.com survey.