WASHINGTON - Rates on 30-year mortgages rose for a second straight week, a sharp rebound after hitting a four-month low.
Two weeks ago, the average for 30-year mortgages had dipped to 6.31 percent, the lowest level since May 17. That decline reflected a flight to safety after the turbulence in credit markets, which had increased demand for Treasury securities. Those securities heavily influence mortgage rates.
Rates on 15-year fixed-rate mortgages, a popular choice for refinancing, averaged 6.09 percent this week, up from 5.98 percent last week.
While rates on 30- and 15-year mortgages rose this week, rates on five-year adjustable-rate mortgages and one-year ARMs declined for a fourth straight week.
The Federal Reserve, which influences short-term rates, said last week it was cutting a key rate a more-than-expected half point in an effort to make sure a steep slump in housing and financial market turbulence don't push the economy into a recession.
The share of the market for adjustable-rate loans continues to decline, hitting its lowest level since March 2003, according to the Mortgage Bankers Association. Borrowers facing the prospect of having their initial low "teaser" ARM loans reset to sharply higher rates are trying to avert that payment shock by refinancing into fixed-rate loans.
Rates on five-year adjustable rate mortgages averaged 6.15 percent, down from 6.21 percent last week. One-year ARMs averaged 5.60 percent, down from 5.65 percent. It marked the fourth straight weekly decline for both adjustable-rate categories.
The mortgage rates do not include add-on fees known as points. Thirty-year mortgages, 15-year, and five-year mortgages all carried a nationwide average fee of a half-point while one-year adjustable-rate mortgages had an average fee of 0.6 point.