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30-Year, Fixed-Rate Mortgages Top 9%

October 28, 1994|From Associated Press

NEW YORK — Thirty-year mortgage rates surpassed 9% this week, the highest level in 2 1/2 years and a striking reflection of the way higher interest rates throughout the economy are making home loans more expensive.

Housing experts, who had expressed surprise at the strength in home buying despite the steady rise of interest rates this year, said they are not expecting a profound slump now.

Thirty-year, fixed-rate mortgages reached 9.03% this week, up from 8.85% last week, according to a national survey by the Federal Home Loan Mortgage Corp., the government agency more often called Freddie Mac.

The last time the 30-year rate exceeded 9% was March 20, 1992; the average then stood at 9.03%. Only a year ago, the mortgage rate had hit 6.74%, a 25-year low.

For the consumer, the increase represents a significant jump in monthly payments. For example, a homeowner with a 30-year $100,000 mortgage at 9% would pay $734 a month, excluding taxes and insurance. That's $71 more than a similar loan carrying an 8% rate and $140 more than one at 7%.

On one-year, adjustable-rate mortgages, lenders were asking an average initial rate of 5.88%, up from 5.77% last week.

The rates do not include the fees known as points.

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