Mortgage rates edge up to 4.35 percent, off decades-low

Only second increase in 12 weeks for 30-year fixed

September 9, 2010 

WASHINGTON — Mortgage rates mostly edged up last week as investors' fears about the economy eased.

Mortgage buyer Freddie Mac says the average rate for a 30-year fixed loan was 4.35 percent, up from 4.32 percent the week before.

It was only the second rise in the past 12 weeks. Last week's was the lowest number since Freddie Mac began tracking rates in 1971.

The average rate on a 15-year fixed loan remained at 3.83 percent after falling last week. It's still the lowest rate on records dating to 1991.

Rates have been falling since spring as investors have shifted money into safe Treasury bonds. That influx of money has lowered Treasury yields, which mortgage rates tend to track. But improved economic news this month has drawn some money back into the stock market.

The higher rates slowed a rush to refinance by bargain-seeking borrowers. Applications to refinance home loans fell 3.1 percent last week, their first drop in six weeks, the Mortgage Bankers Association said Wednesday. Applications to refinance loans accounted for about 82 percent of home loan activity.

The costlier financing reduced overall loan applications by 1.5 percent, the MBA said.

The low rates have done little to help the moribund housing market. Home sales are lower than they've been in decades. Many potential homebuyers are waiting out the economic slump, fearful that they could lose their jobs.

To calculate the national average, Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate sharply, even within a day.

Average rates on five-year adjustable-rate mortgages rose to 3.56 percent this week from 3.54 percent the week before. One-year adjustable-rate mortgage rates were the only ones that dropped: to 3.46 percent from 3.50 percent.

The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount. The nationwide fee for loans in Freddie Mac's survey averaged 0.7 point for 30-year and 1-year mortgages. They averaged 0.6 of a point for 15-year and five-year mortgages.

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