Rates on 30-year mortgages continue to climb

Friday, December 3, 2010; 10:26 AM

Rates on fixed mortgages edged up again this week after hitting their lowest level in decades last month.

Freddie Mac said Thursday that the average rate for 30-year fixed loans rose to 4.46 percent from 4.40 percent last week. Three weeks ago, the rate hit 4.17 percent, the lowest level on records dating back from 1971.

The 15-year loan also rose, to 3.81 percent from 3.77 percent. It hit its lowest point since the survey began in 1991 a month ago, when rates fell to 3.57 percent.

Rates on five-year adjustable-rate mortgages averaged 3.49 percent, up from 3.45 percent a week earlier. Rates on one-year adjustable-rate loans edged up to 3.25 percent from 3.23 percent last week.

The brightening economic picture has reversed the direction of mortgage rates, which had been falling since April. Investors seeking higher returns are shifting money from bonds into riskier investments such as stocks. As demand for Treasurys decreases, investors demand higher yields from the government. Mortgage rates tend to track those yields.

Those yields have risen from yearly lows as the economic picture brightened over the past month. They climbed again Wednesday after reports showed factories boosting production, auto sales rising and many regions seeing stronger economic growth.

More people signed contracts to buy previously owned homes in October. An index of pending home resales jumped a record 10 percent after dropping 1.8 percent in September, the National Association of Realtors said Thursday. The median forecast in a Bloomberg News survey called for a 1 percent decrease.

Interest rate averages reported by Freddie Mac do not include add-on fees, known as points. One point is equal to 1 percent of the total loan amount.

The average fee for a 30-year mortgage in Freddie Mac's survey was 0.8 point. It was 0.7 point for 15-year fixed loans and 0.6 point for five-year and one-year mortgages. The fees were unchanged from last week.

-From wire services

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