Mortgage Rates Climb : Freddie Mac Blames the Jump on Pre-Election Jitters

Home mortgage interest rates rose sharply this week, in part because of market nervousness over a possible Bill Clinton presidency, the Federal Home Loan Mortgage Corp. said Friday.

Average interest rates on 30-year, fixed-rate mortgages rose to 8.23% this week, the highest level in nearly four months, the agency said.

The rate, up from 8.06% a week earlier, was the highest since such mortgages averaged 8.29% in the week ended July 2. It was the sharpest weekly increase since mid-January.

Before rising five times in the last six weeks, mortgage rates had fallen consistently from 9.03% in mid-March to a 19-year low of 7.84% in mid-September.

“This week’s capital markets had a nervous reaction to the possibility of a Democratic administration creating immediate economic growth through fiscal stimulus,” Freddie Mac said.

Economist David Lereah of the Mortgage Bankers Assn. of America said he expected rates to edge down again after the Nov. 3 election.

“This is just pre-election jitters,” he said. “I cannot see how interest rates at these levels can be sustained, given the fundamentals. The economy’s still sluggish and inflationary pressures have not increased.”

On one-year, adjustable-rate mortgages, lenders were asking an average initial rate of 5.13%, up from 5.05% last week and the highest since the week ended Sept. 11. ARM rates hit a historical low of 4.97% two weeks ago.

The rates do not include add-on fees known as points.