Mortgage interest rates are up slightly

Mortgage interest rates are up slightly over the last two months.

The new Federal Reserve Board chairman, Ben Bernanke, did not disappoint. In his first meeting as chairman, as expected, he raised short-term interest rates by another .25 percent so that the Fed Funds target rate now stands at 4.75%. That is the interest rate that banks use to borrow borrow funds from each other overnight.

The Federal Funds rate is influential because it affects many other short-term interest rates, such as the prime rate and short-term treasury notes.

So why did the Fed raise rates yet again?

After a slow fourth quarter in 2005, the economy seems to have picked up the pace in the beginning of 2006. If the economy grows too fast, wage and price inflation become a fear, so the Fed raises rates to try and slow things down.

We expect mortgage rates to remain fairly stable, with the continued potential for small increases like we've experienced since the beginning of the year. At the same time, there is potential for a little bit of a bump when employment growth figures are announced during the first week of April and as 1st quarter economic figures come out later in the month.

Mortgage Rate Update

Long-term mortgage interest rates were up again Thursday, and the benchmark 10-year Treasury bond yield rose to 4.86 percent.

The 30-year fixed-rate average climbed to 5.97 percent, and the 15-year fixed-rate edged up to 5.66 percent. The 1-year adjustable was up at 4.97 percent.

The 30-year Treasury bond yield jumped to 4.9 percent.

Rates are current as of 7:15 p.m. Eastern Standard Time.

Mortgage rate figures are according to Bankrate.com, which publishes nightly averages based on its survey of 4,000 banks in 50 states. Points on these mortgages range from zero to 3.5.

In other economic news, the Dow Jones Industrial Average was down 65 points, or 0.58 percent, finishing at 11,150.7. The Nasdaq gained 3.04 points, or 0.13 percent, closing at 2,340.82.

Stock and bond figures are current as of 7:30 p.m. Eastern Standard Time.