Mortgage rates hold steady

As investors try to assess the pace of economic recovery, interest rates are not moving much - and aren't expected to in the near term.

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By Catherine Clifford, staff writer

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Mortgage Rates
30 yr fixed 3.80%
15 yr fixed 3.20%
5/1 ARM 3.84%
30 yr refi 3.82%
15 yr refi 3.20%

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NEW YORK ( -- Home mortgage rates were nearly unchanged from the previous week as investors weigh better-than-expected corporate earnings against the record volume of debt the government is selling.

The average 30-year fixed mortgage edged up to 5.56% from 5.55% the week prior, and the 15-year fixed dipped to 4.88% from 4.89%, according to the weekly national survey from

Last week, mortgage rates were nearly unchanged, as well. "Mortgage rates remain range-bound as investors sort out uncertainty about the economy, corporate earnings, and the future path of interest rates," the report noted.

Mortgage rates move in tandem with Treasury yields. In particular, the 30-year fixed mortgage rate tracks the benchmark 10-year Treasury yield.

Investors tend to buy up Treasurys, or government debt, in times of economic uncertainty, or when Wall Street is struggling. Uncle Sam's debt is considered an ultra-safe investment. Meanwhile, when Wall Street is on a run, investors dump Treasurys for more attractive yielding investments.

The Treasury market is also being affected by the record volume of debt the government is selling to fund its stimulus efforts. The onslaught of supply pushes debt prices lower, which pulls yields higher. Bond prices and yields move in opposite directions.

In an effort to contain the rise in debt yields - and thereby mortgage rates as well - the government launched a debt buyback program. But analysts have argued that the program is not big enough to make a significant difference in rates.

"With the Treasury issuing large blocks of debt, investors are now seeking clarification on whether the Federal Reserve will extend the program of government debt buy backs to keep a lid on long-term interest rates including fixed mortgage rates," the report said.

Bankrate also conducts a forward-looking survey by asking a panel of mortgage experts to predicts which way the rates are headed over the next 30 to 45 days. The consensus is mixed: 38% say rates will fall, 31% say rates will rise, and 31% say rates will remain unchanged.

Even though mortgage rates have been climbing higher, they remain significantly below this time last year.

The average 30-year fixed mortgage rate was 6.7% at the same time last year, which means that a $200,000 loan would have had a monthly payment of $1,290.56. At the current rate of 5.56%, the monthly payment for the same loan would be $1,143.12, $147 less than last year.

Adjustable-rate mortgages were slightly higher, the report said, with the average 5-year ARM ticking up to 4.95% from 4.93% last week. To top of page

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