Mortgage Rates Up Slightly

Mortgage rates rose slightly this past week, but still remained under 5 percent for a 30-year fixed rate mortgage, according to the weekly survey by government-backed lender Freddie Mac.

The average rate on a 30-year loan was 4.92 percent for the week ending Oct. 15, according to the survey, up from 4.87 percent the week before. The rate is based on an average of 0.7 points paid and an 80 percent loan-to-value ratio.

It's the third consecutive week the rate remained below 5 percent in the weekly survey.

A bigger increase was reported in the weekly Bankrate survey, which is released around the same time. That survey pegged 30-year rates at an average of 5.32 percent, up from 5.22 percent the week before. The Bankrate survey typically runs higher due to differences in survey methods.

The low rates are continuing to generate interest among consumers in refinancing their mortgages, but not nearly at the levels that occurred last spring when rates fell to historic lows. Refinancings made up about 60 percent of all mortgage applications last week, according to figures from the Mortgage Bankers Association, a respectable level but down considerably from the 85 percent level they reached last spring when rates were averaging about two-tenths of a percent lower.

Refinancing little changed; purchase applications fall

Refinance activity held fairly steady last week, with applications falling only 0.1 percent for the week ending Oct. 9, according to the MBA. Purchase applications were down a full 5 percent on a seasonally adjusted basis, however.

Rising rates in the weeks to come could be a sign that the economy is growing again and that lenders are demanding a greater return on their money. However, rates may continue to remain low if the economy remains weak and prospects for growth remain slim.

On other loan types, Freddie Mac reported that the rate on 15-year fixed rate mortgages rose slightly to 4.37 percent with 0.7 points paid, up from 4.33 percent last week. The average rate on five-year Treasury indexed adjustable rate mortgages was 4.38 percent, up from 4.35 percent last week.

The market for ARMs has been slowly recovering since last spring, when their rates were almost identical with 30-year fixed rate loans. ARMs are currently making up about 6.2 percent of all mortgage applications, according to the MBA.

Rates remain far below last year's

Mortgage rates continue to run far below their averages of one year ago. According to Freddie Mac, the average rate on a 30-year fixed rate loan one year ago this week was 6.46 percent, more than 1.5 percentage points higher than the current figures. The differences on 15-year mortgages and five-year ARMs are even greater, about 1.7 percentage points lower compared to the average rates of one year ago last week of 6.14 percent on both.

By comparison, the average rate on a 30-year fixed rate mortgage one year ago this week was The 15-year FRM this week averaged 4.37 percent with an average 0.7 point, up from last week when it averaged 4.33 percent. A year ago at this time, the 15-year FRM averaged 6.14 percent.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.38 percent this week, with an average 0.6 point, up from last week when it averaged 4.35 percent. A year ago, the 5-year ARM averaged 6.14 percent.