Interest rates on U.S. 30- and 15-year mortgages fell for a second straight week, mortgage finance company Freddie Mac (FRE) said Thursday.

U.S. 30-year mortgage rates dipped to an average of 5.68 percent in the week ended Dec. 16 from 5.71 percent a week earlier, while 15-year mortgages declined to an average of 5.11 percent from 5.14 percent last week.

One-year adjustable rate mortgages inched upward to an average of 4.18 percent from 4.15 percent.

A year ago, 30-year mortgage rates averaged 5.88 percent, 15-year mortgages 5.24 percent and the ARM 3.77 percent.

Frank Nothaft, Freddie Mac vice president and chief economist, said despite a Commerce Department (search) report on Thursday that showed a 13.1 percent plunge in U.S. November housing starts, the housing picture was upbeat.

"With December's mortgage rates continuing to dip even further, we expect housing starts will bounce back fairly quickly," said Nothaft.

"There is no doubt now that 2004 will be a record year for single-family construction. That said, because of low mortgage rates, we feel confident that 2005 will not be very far behind this year," he said.

The Federal Reserve (search) on Tuesday pushed U.S. interest rates up by a modest quarter-percentage point and expressed confidence that inflation could be kept at bay by slowly lifting credit costs from rock-bottom levels.

The central bank's policy-setting Federal Open Market Committee (search) unanimously decided to raise the benchmark federal funds rate — which affects borrowing costs throughout the economy — to 2.25 percent from 2 percent. It was the fifth straight increase this year.

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

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.