Combination of potentially stabilizing stock market, higher inflation expectations and Fannie and Freddie problems ..

sends rates to their highest level in months. See national and Maryland specific charts here.

As the stock market halted its free fall a lot of scared money stopped flowing into the bond market and rates naturally trended up to attract new money. Likewise, with increased inflation expectations, longer term bond investors are demanding more yield on their money in order to keep up with inflation and are even less likely to hand over money to the likes of Fannie Mae and Freddie Mac without a big interest premium. Plus many of the institutions who would normally be buying these bonds or mortgages simply don't have the capital to do so right now. Add this to a couple of Fed governors finally taking steps to defend the dollar (tough talk on shorter term interest rate policy) and you have the APR on a conforming 30-year fixed home loan creeping up above 7.0% yesterday at Bank of America for the first time since 2002. Rates on the average jumbo loan are now higher than they have been since late 2000. If the trend continues upward it means higher monthly payments for new borrowers and likely continued downward pressure on home prices (since an ever smaller loan amount equates to the same monthly payment as rates incrementally increase).

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