Freddie Mac: Mortgage rates up from yearly low

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NEW YORK (AP) — Rates on 30-year fixed mortgages backed off from yearly lows this week, but still remain historically cheap.

Mortgage finance company Freddie Mac says the average rate rose to 4.75 percent, up from 4.72 percent last week. The rate hit 4.71 percent in December, the lowest since Freddie Mac began keeping records in 1971.

The average rate on a 15-year fixed-rate mortgage edged up to 4.2 percent, up from its all-time low of 4.17 percent set last week.

A Federal Reserve program to reduce borrowing costs for consumers pushed rates down to extraordinarily low levels last year. Rates were expected to rise after the campaign ended this spring, but have declined instead over the past two months as investors shifted money into the safety of U.S. Treasury bonds.

Concerns over the European debt crisis and the volatile stock market have made U.S. Treasury debt more attractive. And mortgage rates tend to follow the yield on U.S. Treasury debt.

Low mortgage rates could help buoy housing demand after the expiration of federal tax credits. First-time buyers could get a credit of up to $8,000, while current owners who bought and moved into another home could qualify for a credit of up to $6,500. Buyers had until April 30 to get a signed sales contract and until June 30 to complete the sale.

Home sales started to lag after the credits' deadline. But a recent report offered a sign that buyers are finally taking advantage of low rates. The number of customers applying for refinance and purchase mortgages climbed 18 percent last week after falling sharply the month before, the Mortgage Bankers Association said Wednesday.

Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.

Rates on five-year, adjustable-rate mortgages averaged 3.89 percent, down from 3.92 percent a week earlier. Rates on one-year, adjustable-rate mortgages fell to 3.82 percent from 3.91 percent. That was the lowest average since May 2004.

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 a point for 30-year, 15-year and 5-year loans. The average fee for 1-year loans was 0.6 of a point.
   
Copyright 2010 The Associated Press.