U.S. fixed mortgage rates rise but hover near lows

NEW YORK (Reuters) - U.S. fixed mortgage rates crept higher in the past week, but hovered near all-time lows and more than a percentage point below rates a year ago, Freddie Mac said on Thursday.

The average 30-year mortgage rate climbed 0.02 percentage point in the week ended May 14 to 4.86 percent, slightly above the record low 4.78 percent reached twice in the past two months.

A year ago, the rate stood at 6.01 percent.

Low borrowing costs along with steep home price declines from 2006 peaks have propelled housing affordability to a record high by some measures.

First-time buyers, unburdened with an existing home to unload before purchasing another one, represent half of all sales. An $8,000 federal tax credit for first-time buyers as well as various state tax credits have lifted sales to those borrowers.

Still, the U.S. housing market remains stuck in the deepest slump since the Great Depression.

Spotty signs of stabilization have emerged but housing is unlikely to soon rebound with the market awash in unsold homes and foreclosures at record highs, industry experts have said.

The highest unemployment rate in more than a quarter century and fears of job loss continue to overshadow the lure of affordability for many potential buyers.

Freddie Mac FRE.N FRE.P, the second largest U.S. home funding company, has been tracking the 30-year loan rate weekly since 1971.

Lenders charged an average of 0.6 percent on loans in the past week, down from 0.7 percent the prior week.

Rates on adjustable mortgages declined slightly in the week.

(Reporting by Lynn Adler; Editing by Andrea Ricci)