Mortgage Rates Edge Higher

Interest rates on U.S. 30-year mortgages edged higher in the latest week, but mortgage finance company Freddie Mac (FRE) said Thursday they were unlikely to rise much above current levels through 2005.

U.S. 30-year mortgage rates rose to an average of 5.72 percent in the week ended Sept. 30, up from 5.70 percent a week earlier, Freddie Mac said, while 15-year mortgages averaged 5.12 percent compared with 5.10 percent last week.

One-year adjustable rate mortgages (search) bucked the upward trend, falling slightly to 3.97 percent from 4.00 percent a week ago.

"Mortgage rates didn't move much this week, e Mac vice president and chief economist Frank Nothaft said in a statement.

"Our forecast is for the 30-year fixed-rate mortgage rate to remain below six percent for the rest of the year and not much higher than that for 2005," he said.

A year ago, 30-year mortgage rates averaged 5.98 percent, 15-year mortgages 5.30 percent and the ARM 3.77 percent.

Even though mortgage rates have risen from record lows seen in March, consumers are still flocking to buy new homes.

On Monday, the Commerce Department (search) said August single-family home sales rose 9.4 percent — the largest one-month gain since December, 2000 — to a 1.184 million unit annual rate.

However, the National Association of Realtors reported last week a 2.7 percent drop in U.S. August existing home sales to an annual rate of 6.54 million units.

The U.S. Federal Reserve has raised interest rates by a quarter of a percentage point three times this year and said the economy was regaining momentum, signaling at least one more hike to come. Additional rate increases by the Fed could make it more costly for consumers to borrow money to buy a home.

Freddie Mac said lenders charged an average of 0.6 percent in fees and points on 30-year and 15-year mortgages and the ARM, down from 0.7 percent a week ago.

Freddie Mac is a mortgage finance company chartered by Congress that buys mortgages from lenders and packages them into securities for investors or holds them in its own portfolio.