US fixed mortgage rates rose in week - Freddie Mac

NEW YORK Thu May 28, 2009 12:02pm EDT

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NEW YORK May 28 (Reuters) - U.S. fixed mortgage rates climbed with government bond yields in the past week to stand about 1/8 percentage point above record lows, Freddie Mac said on Thursday.

The average rate on 30-year mortgages rose 0.09 percentage point to 4.91 percent in the week ended May 28.

The rate in April had fallen as low as 4.78 percent, the lowest since Freddie Mac began tracking it weekly in 1971.

Still, rates are still below a year ago when 30-year mortgages averaged 6.08 percent.

"Fixed-rate mortgage rates followed long-term bond yields higher this week as financial markets try to discern the state of the economy" among mixed signals in the latest week, Frank Nothaft, Freddie Mac chief economist, said in a statement.

There have been signs in recent U.S. economic data that the recession may be easing. Consumer confidence leaped in May and home sales in April rose. The National Association of Business Economics called for recession to end in the second half of this year, but said the recovery would be more moderate than in its prior survey.

"Housing continues to be a drag on the economy," Nothaft said in the statement.

While home sales turned upward, unsold inventory also expanded.

Sales of distressed homes made up 45 percent of April transactions. "Such types of sales mixed with a large supply of unsold homes keep depressing house prices."

U.S. home prices, on average, have tumbled more than 32 percent in March from the 2006 peak, based on the Standard & Poor's/Case-Shiller indexes reported this week.

To read more detail on the past week's mortgage rates, see [ID:nWAT011505].

Lenders charged an average 0.7 percent on fixed-rate mortgages in the latest week, unchanged from the prior week.

(Reporting by Lynn Adler)

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