NEW YORK (CNN/Money) -
Long-term mortgage rates edged higher for the second straight week as investors saw more signs of a strengthening economy, mortgage financier Freddie Mac said Thursday.
The rate on 30-year fixed-rate mortgage loans rose to 6.05 percent in the week ending Oct. 17, with an average of 0.5 point payable up front, up from 5.95 percent last week. The 30-year stood at 6.15 percent at this time last year, according to Freddie Mac.
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The 15-year fixed-rate mortgage climbed to 5.36 percent, up from 5.26 percent last week. The 15-year averaged 0.5 point payable up front. A year ago, the 15-year rate stood at 5.56 percent.
The rate on one-year adjustable-rate mortgages, loosely indexed to the 10-year Treasury note, rose to 3.79 percent from 3.69 percent last week. That rate is below the year-ago rate of 4.27 percent.
"Bond yields have been creeping up on an almost daily basis since the beginning of October, pushing mortgage rates up as they go," said Frank Nothaft, Freddie Mac chief economist. "Inflation remains low, however, and we expect that to continue into 2004 and beyond. And as long as it does, we won't see mortgage rates rising very dramatically."
"Meanwhile, regional indicators of manufacturing have shown some improvement over the month, most notably in New York, another hopeful sign the economy is actually gaining additional strength."
Freddie Mac's average mortgage rates are based on a survey of 125 lenders nationwide. The rates include those on mortgages accepted by borrowers with good credit ratings who place a 20 percent down payment on their homes, according to Freddie Mac.
Freddie Mac (FRE: up $0.13 to $59.20, Research, Estimates), or Federal Home Loan Mortgage Corp., is a publicly traded company the government established in 1970 to provide a flow of funds to mortgage lenders. It buys mortgages from banks, bundles them and then resells them as mortgage-backed securities.
Its products, and the products of other similar entities, have become increasingly popular as an alternative to government-backed bonds, particularly with international investors.
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