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As Bond Yields Rise, Mortgage Rates Inch Up

Although the movement was minor, mortgage rates nudged up for the week ending March 25, 2010, ""Freddie Mac"":http://www.freddiemac.com/ and ""Bankrate"":http://www.bankrate.com/ reported Thursday.

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According to the results of Freddie Mac's Primary Mortgage Market Survey (PMMS), 30-year fixed-rate mortgages averaged 4.99 percent with an average 0.6 point this week, up slightly from last week's average of 4.96 percent. During this same week in 2009, rates averaged 4.85 percent.

Freddie Mac also reported a small increase in 15-year fixed-rate mortgages. This week, rates averaged 4.34 percent with an average 0.6 point, up just 0.01 percent from 4.33 percent last week. However, rates were still notably lower than last year at this time when 15-year fixed-rate mortgages averaged 4.58 percent.

""Mortgage rates inched up slightly this week as bond yields rose even further,"" said Frank Nothaft, Freddie Mac VP and chief economist. ""Interest rates on 30-year fixed mortgages, however, were still below 5 percent for the fourth consecutive week.""

Bankrate also reported a slight jump in rates, pointing to favorable economic news as the cause.

According to its weekly national survey, 30-year fixed-rate mortgages rose to 5.11 percent with an average 0.41 point this week, a jump from last week's average of 5.07 percent. In addition, Bankrate said 15-year fixed-rate mortgages averaged 4.47 percent with an average 0.41 point, up from 4.45 percent last week.

Despite the general decline in rates, Bankrate reported that ""things continue to improve in the jumbo mortgage arena, with rates inching lower on a week when most other mortgage products were higher."" This week, the jumbo 30-year fixed-rate mortgage retreated to 5.87 percent, the lowest it has been since February 2005.

Going forward, Bankrate said the downgrade of Portugal's sovereign credit rating coupled with an end to the Federal Reserve's mortgage bond purchase program ""spells volatility on the horizon.""

This belief was echoed in Bankrate's weekly Rate Trend Index, in which a panel of mortgage experts predicts which way rates are headed over the next week. A meager 6 percent forecast a decline in mortgage rates, and 19 percent expect rates will remain unchanged. The remaining 75 percent predict a climb in mortgage rates.

About Author: Brittany Dunn

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