Mortgage Rates Rise Slightly On 30-Year Fixed Loan

U.S. mortgage rates rose in the latest week, complicating government efforts to bring mortgage rates down to levels that will spur demand and help the housing market begin to recover.

Interest rates on U.S. 30-year fixed-rate mortgages rose to 5.07 percent for the week ending Feb. 26, up from the previous week's 5.04 percent, according to a survey released on Thursday by home funding company Freddie Mac .

The battered U.S. housing market, which is in the midst of its worst downturn since the Great Depression, is both the source and a major casualty of the credit crisis. A setback for the market could prolong a turnaround for the United States, the world's largest economy.

"Mortgage rates were little changed this week amid mixed data reports of a slowing economy," Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement.

Six weeks earlier, mortgage rates had been as low as 4.96 percent, which was the lowest since Freddie Mac started the Primary Mortgage Market Survey in 1971.

The recent rise in mortgage rates can be tied to yields U.S. Treasury bonds, to which mortgage rates have a link.

Treasury yields have risen sharply on fears over surging debt issuance to fund a ballooning budget gap and an array of government rescue programs.

Thirty-year mortgage rates had mostly been on a downward trend since the Federal Reserve unveiled a plan in late November to buy as much as $500 billion of mortgage securities backed by Fannie Mae , Freddie Mac and Ginnie Mae. The program also entails buying up to $100 billion of debt issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks.

Low mortgage rates in recent weeks have spurred a surge in demand for home refinancing loans, and refinancing to lower monthly payments should provide a bit of relief to strapped consumers amid rising unemployment and a shrinking economy.

Low mortgage rates, however, have had only a marginal impact on demand for loans to purchase homes, igniting calls to bring rates down to much lower levels.

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