Interest Rates

Like many recent college grads, Los Angeles resident Steven Lee finds himself unemployed in one of the roughest job markets in decades and saddled with a big pile of debt. He owes about $84,000 in student loans for undergrad and grad-school costs. But what Lee's angry about isn't the slings and arrows of an outrageous economy, and it isn't the idea that he owes a ton of money for all the learning he's received. It's the interest rates on his government-backed student loans, which range from 6.8% to a whopping 8.5%.

Fixed interest rates on home loans crept back up a bit this week, mortgage giant Freddie Mac said Thursday. The government-controlled mortgage finance company said fixed rates on 30-year home loans averaged 4.92% with an additional 0.7% of the mortgage amount paid in upfront fees known as points. That was up from 4.87% the week before, when upfront costs also averaged 0.7%. A year ago the average rate was 6.46%. The average rate on a 15-year fixed-rate mortgage, a popular option for people who are refinancing and want to pay their loans off faster, was 4.37% this week with similar upfront fees, Freddie Mac said.

WASHINGTON -- Federal Reserve Chairman Ben Bernanke today called for the United States to whittle down its record-high budget deficits and for countries like China to get their consumers to spend more, moves that would help combat skewed global trade and investment flows that contributed to the financial crisis. Bernanke's remarks to a Fed conference in Santa Barbara, Calif., comes just days after the federal government on Friday reported a $1.42 trillion deficit for 2009 budget year that ended Sept.

After three weeks in the sub-5% range, interest rates on 30-year mortgages crept back to that benchmark in the week that ended Thursday, according to the latest survey of lenders by Freddie Mac. Freddie's report said lenders nationally were committing to make 30-year fixed-rate home loans at an even 5% rate on average. That average applied to traditional mortgages of as much as $417,000 eligible for purchase by Freddie and its sister firm, Fannie Mae, with a 20% down payment by borrowers with good credit.

The Federal Reserve said today it was holding short-term interest rates at near zero and would probably make no change for the foreseeable future, despite the turnaround in economic activity. And the decision to leave monetary policy essentially unchanged came in the face of growing differences inside the Fed about when to start tightening up on credit to forestall the possibility of an inflationary surge. Chairman Ben S. Bernanke and his peers at the policy-setting committee reiterated that they would maintain the benchmark overnight lending rate between zero and 0.25%, adding that the rate was likely to remain "exceptionally low" for "an extended period of time."

NEW YORK -- Encouraging news on jobs and worker productivity gave investors new reason to be optimistic about the economy and pushed stocks to big gains. The Dow Jones industrial average jumped 150 points Thursday, while the Nasdaq composite index, which has a concentration of technology stocks, gained about 2 percent after an upbeat forecast from Cisco Systems Inc. The Labor Department said the number of newly laid-off workers seeking unemployment benefits fell to 512,000 last week, the lowest level since January and fewer than economists had forecast.

Ayear after the Big Three implored Congress to save their industry from collapse, the fortunes of U.S. automakers are looking up. Ford, which lobbied for the bailout but took no aid directly, recently reported its second consecutive quarterly profit. General Motors, which emerged from bankruptcy with the U.S. government as its biggest stakeholder, announced even better sales in October than Ford. It's harder to find good news out of Chrysler, which has received $13.8 billion in federal aid. But at least its new leadership announced plans this month to break even by 2011 and pay taxpayers back by 2014.

The Dow Jones average of blue-chip stocks rallied to its highest level in more than a year today after Group of 20 finance ministers and central bankers reassured investors this weekend that they would continue working to prop up world economies and keep interest rates low. "The rally has been going for some days now," said Jim Paulsen, chief investment strategist at Wells Capital Management in Minneapolis. "More than anything, it is the continuation of good data -- better than expected economic reports."

Average rates on 30-year fixed mortgages dropped to 5.01% this week, down from the previous record low of 5.1% set last week, mortgage company Freddie Mac said. The average rate on a 15-year fixed-rate mortgage dropped to 4.62% from 4.83% last week, Freddie Mac said. Five-year adjustable-rate mortgages fell to 5.49% from 5.57%. One-year adjustable-rate mortgages rose to 4.95%, up from 4.85% last week. The rates do not include add-on fees known as points. The nationwide fee for 30-year mortgages averaged 0.6 of a point for this week.

The average rate on 30-year fixed mortgages rose to 5.12% this week from a record low of 4.96% established last week, mortgage company Freddie Mac said. The average rate on a 15-year fixed-rate mortgage rose to 4.8% from 4.65% last week. Five-year, adjustable-rate mortgages fell to 5.24%, their lowest level since the week ending Sept. 8, 2005, Freddie Mac said. Rates on one-year, adjustable-rate mortgages rose to 4.92% from 4.89% last week. These rates do not include add-on fees known as points.