Rates on 30-year mortgages creep up to 4.23%

Friday, October 29, 2010; 9:14 AM

Rates on 30-year fixed mortgages rose slightly this week to an average of 4.23 percent, just above the lowest level in decades.

The average rate for 30-year fixed loans inched up from 4.21 percent last week, Freddie Mac said Thursday. Earlier in the month rates fell to 4.19 percent, the lowest average on records dating back to 1971.

The average rate on 15-year fixed loans rose to 3.66 percent, up from 3.64 percent last week. Rates on five-year adjustable-rate mortgages averaged 3.41 percent, up from 3.45 percent. Rates on one-year adjustable-rate mortgages remained at an average of 3.3 percent.

Rates had been falling since April. They remained low this month because investors have been buying up Treasury bonds in anticipation of the Federal Reserve's likely move to buy Treasurys to stimulate the economy. That demand lowers Treasury yields, which mortgage rates tend to track.

Low rates haven't helped the struggling housing market, which recorded its worst summer in more than a decade. But they have led to a modest surge in refinancing.

Mortgage applications increased by 3.2 percent in the week ended Oct. 22, the Mortgage Bankers Association said Wednesday. The group's index showed purchases gained 3.9 percent while refinancing rose 3 percent.

Sales of new homes increased 6.6 percent in September to a 307,000 annual rate, near the record-low 282,000 reached in May, the Commerce Department said Wednesday.

Existing-home sales climbed 10 percent last month, according to National Association of Realtors data released this week. The pace was still the third-lowest in records going back a decade.

Freddie Mac's 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 0.8 a point for 30-year loans. It averaged 0.7 of a point for 15-year loans and one-year adjustable-rate mortgages, and 0.6 of a point for 5-year mortgages.

-From news services

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