US Mortgage Rates Rise From Record Lows

U.S. mortgage rates rose in the latest week, rising from a record low matched during the previous week and countering government efforts to bring rates down to levels that will spur demand and help the hard hit housing market begin to recover.

Interest rates on U.S. 30-year fixed-rate mortgages rose to 4.84 percent for the week ending May 7, up from the previous week’s 4.78 percent, equaling the all-time low, according to a survey released on Thursday by home funding company Freddie Mac [FRE  0.939    -0.001  (-0.11%)   ] .

Mortgage rates initially fell to 4.78 percent the week of April 2, the lowest since Freddie Mac started surveying them in 1971.

“Mortgage rates rose slightly this week amid positive economic news that the economy may be approaching the bottom of the recession,” Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement.

Thirty-year mortgage rates had mostly been on a downward trend since the Federal Reserve unveiled a plan to buy mortgage-backed debt in late November.

The Federal Reserve has set a goal to buy up to $1.25 trillion of agency mortgage-backed securities, $300 billion of Treasuries and $200 billion of agency debt in 2009. The purchases are part of efforts to lower borrowing costs.

Cameron Findlay, chief economist at LendingTree.com based in Charlotte, North Carolina, said the strategy has been making an impact.

“The Federal Reserve’s strategy and tactics to drive markets one way or another are well known in advance, so they must gauge the market’s perception of their actions in advance, not only their resulting actions,” he said.

“Their actions to date have proven they can move the market in a desirable direction,” he said.