30-year mortgage rate rises above record low

NEW YORK (CNNMoney) -- The 30-year fixed mortgage rate rose for the first time in four weeks, relinquishing its all-time record low amid news that the housing market is showing some signs of improvement.

Rates on 30-year fixed loans rose to an average of 3.95% from the record 3.87% last week, according to Freddie Mac (FMCC, Fortune 500). Meanwhile, the rate on 15-year fixed loans inched slightly higher to 3.19% after sticking at 3.16% for two weeks in a row.

The rise in rates is a vote of confidence for the housing market, which continues to show signs of gradual improvement, said Frank Nothaft, Freddie Mac's chief economist.

Adding to the cautious optimism about the housing industry are recent reports that showed a decline in the percentage of borrowers who were seriously delinquent on their loans, an increase in new home construction and a stronger pace of existing home sales.

Home prices at lowest point in 10 years

Mortgage rates have mostly been on a slow downward trend since last year, when the 30-year rate averaged 4.95% and the 15-year averaged 4.22%, according to Freddie.

The recent increases, said Keith Gumbinger of HSH Associates, could be the beginning of a gentle rate climb over the next few months, making borrowing to buy a house a tad more expensive.

However, the current difference between this week's average and the record low that was initially set three weeks ago would only add about $4.50 for every $100,000 to a borrower's monthly mortgage payment.

Although rates could go higher if the economy continues to gain strength. "It's premature to make any strong claims right now," he said.

But with investors feeling better about parking their money in stocks these days -- the S&P 500 (SPX) is up more than 8% year-to-date -- yields on fixed-income investment like Treasuries are likely to make some gains.

Economy in recovery? Not so fast

"With the economy better, you don't have to stick your money in those safe havens," said Gumbinger.

Bond yields will have to rise to attract buyers and, since mortgage rates closely track those bond yields, mortgage rates will likely go up, too, he said.

Although they will probably climb more slowly than Treasuries will. That's because the spread -- the difference between mortgage rates and bond yields -- often shrinks when bond yields rise, according to Greg McBride, senior financial analyst at Bankrate.com.

The difference between the two usually runs about 1.7 percentage points, said Gumbinger, but it has been hovering around 2 points since last July. As the mortgage rates lag the growth in bond yields, that spread will narrow.