Mortgage Rates Rise Again, Latest Blow to Housing

If you’re thinking of buying a house or refinancing your mortgage, you might want to wait a bit longer. Freddie Mac , a major provider of mortgage money. The 15-year fixed mortgage rose to 5.72 percent from 5.64 percent. AP Homes in Las Vegas, one of the country’s harder-hit real estate markets. One-year adjustable rate mortgages (ARM) also rose this week, averaging 5.11 percent compared to 4.98 percent last week.

The “5/1″ ARM, set at a fixed rate for five years and adjustable each following year, averaged 5.43 percent, up from 5.37 percent last week, Freddie Mac said. Why is this happening? Though the Federal Reserve has been aggressively cutting interest rates, mortgage rates have actually been going up, not down. The reason: Banks are still reluctant to make home loans even though money is cheaper.

“What people are realizing is that the interest-rate cuts haven’t helped anybody but the banks,” said Michael Cohn, chief investment strategist at Atlantis Asset Management. “They’re taking these rate cuts and pocketing the money … to shore up their own balance sheets.” With 30- and 15-year mortgage rates rising back to their levels of last November, refinancing activities will likely begin to decline, said Frank Nothaft, Freddie Mac vice president and chief economist, in a statement.

The news couldn’t happen at a worse time for the already battered housing market.