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30 Year Fixed Mortgage Rate Rises Slightly to 5 Percent

Published: Thursday, 22 Oct 2009 | 10:53 AM ET

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By: Reuters

U.S. 30-year fixed-rate mortgages, the most widely used loan, rose for a second straight week, hitting a key level that may cut into demand.
Mortgage rates up

The rates averaged 5.00 percent for the week ending Oct. 22, up from the previous week's 4.92 percent, according to a survey released Thursday by home funding company Freddie Mac.

Many industry experts view 5 percent as a key psychological level. When rates drop below it, home loan demand tends to rise, while the opposite holds true when rates rise.

Still, mortgage rates remain low. A year ago, 30-year mortgage rates averaged 6.04 percent. The rate is significantly higher than the record low of 4.78 percent set in the week ended April 2.

"Following bond yields, long-term mortgages rates edged up slightly this week," Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement. Mortgage rates are linked to both Treasury and MBS yields.

Freddie Mac [FRE Loading... () ]started the survey in 1971. Separately, the Mortgage Bankers Association said home loan demand fell last week for a second straight week. For rates table, double-click

Freddie Mac said the 15-year fixed-rate mortgage averaged 4.43 percent in the latest week, up from 4.37 percent the prior week. For rates table, double-click on

One-year adjustable-rate mortgages (ARMs), were 4.54 percent, down from 4.60 percent last week. Freddie Mac said the "5/1" ARM, set at a fixed rate for five years and adjustable each following year, was 4.40 percent, compared with 4.38 percent a week earlier.

A year ago, 15-year mortgages averaged 5.72 percent, the one-year ARM 5.23 percent and the 5/1 ARM 6.06 percent.