Average US rate on 30-year mortgage rises to 3.93 per cent; 15-year loan at 3.20 per cent

WASHINGTON – Average U.S. long-term mortgage rates edged higher this week after four weeks of declines, but they remained at historically low levels that could entice potential homebuyers.

Mortgage company Freddie Mac said Thursday that the nationwide average for a 30-year mortgage rose to 3.93 per cent this week from 3.89 per cent last week. It is now at its lowest level since June 2013.

Rates are about a half-point lower than at the beginning of the year, when the benchmark 30-year rate stood at 4.53 per cent.

The average for a 15-year mortgage, a popular choice for people who are refinancing, increased to 3.20 per cent this week from 3.10 per cent last week.

Rates had fallen in earlier weeks amid economic slowdowns in Europe and China, and the start of a recession in Japan. The four-week decline came despite the recent end of the Federal Reserve’s monthly bond purchases, which were intended to keep long-term interest rates low. There is speculation in financial circles that the Fed could abandon in mid-2015 its longstanding policy of holding shorter-term rates at near-zero levels.

Mortgage rates often follow the yield on the 10-year Treasury note. The 10-year note traded at 2.17 per cent Wednesday, down from 2.28 per cent a week earlier. It traded at 2.19 per cent Thursday morning. Bond yields rise when bond prices fall.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 per cent of the loan amount.

The average fee for a 30-year mortgage was unchanged from last week at 0.5 point. The fee for a 15-year mortgage also remained at 0.5 point.

The average rate on a five-year adjustable-rate mortgage rose to 2.98 per cent from 2.94 per cent. The fee was steady at 0.5 point.

For a one-year ARM, the average rate slipped to 2.40 per cent from 2.41 per cent. The fee held at 0.4 point.