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30-Year Mortgage Rates Rise

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By MARTIN CRUTSINGER, The Associated Press

Published: September 28, 2007

WASHINGTON - Rates on 30-year mortgages rose for a second straight week, a sharp rebound after hitting a four-month low.

Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages averaged 6.42 percent this week, up from 6.34 percent last week.

Two weeks ago, the nationwide 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. 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.

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, announced last week it was cutting a key rate by a more-than-expected half point in an effort to make sure 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.

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