Fixed mortgage rates rise above 4 percent

The average rate on the 30-year fixed mortgage rose sharply this week after falling below 4 percent for the first time in history.

Freddie Mac said Thursday that the rate on the 30-year fixed loan rose to 4.12 percent. That's up from 3.94 percent last week, the lowest rate ever according to the National Bureau of Economic Research.

The average rate on the 15-year fixed mortgage, a popular refinancing option, increased to 3.37 percent from 3.26 percent, also a record.

Super low fixed mortgage rates haven't been enough to lift the housing market, which has struggled in recent years with anemic sales and declining home prices.

Rates have been below 5 percent for all but two weeks in the past year. Just five years ago they were closer to 6.5 percent.

Yet sales of previously occupied homes this year are on track to be among the worst in 14 years. Sales of new homes are on pace to finish the year as the lowest on records dating back a half-century.

For many Americans, buying a house is too big a risk in this economy. Unemployment has been stuck near 9 percent for more than two years, raises are scarce and millions of foreclosures are forcing down home prices.

Others can't qualify for the historically low rates. Banks are also insisting on higher credit scores and 20 percent down payments for first-time buyers. Many repeat buyers have too little equity invested in their homes to qualify for loans.

Just half of Americans say they'll ever be able to save enough money to save for a down payment, according to a survey by the National Foundation for Credit Counseling.

Mortgage rates are low because they tend to track the yield on the 10-year Treasury note. The yield rose after government reported modest job gains in September and revisions to show more hiring in July and August.

Low mortgage rates have fueled a modest boom in refinancing. Still, most people who can afford to refinance have already locked in rates below 5 percent.

Economists say rates need to fall at least a full percentage point before it makes sense to refinance again. The reason is homeowners typically pay a few thousand dollars in closing costs when they refinance.

The low rates being offered also don't include extra fees, known as points, which many borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount. The average fees for the 30-year loan stayed at 0.8 point. The 15-year fixed loan rose to 0.8.

And more Americans refinancing their mortgages are not likely to provide much benefit to the economy. At least 25 percent of U.S. homeowners have little or no equity in their homes. So unlike in the past, people who refinance now don't tend to draw money out for home-improvement projects or other big expenditures that would contribute to economic growth.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week.

The average rate on a five-year adjustable-rate mortgage increased to 3.06 percent from 2.96 percent. That followed six straight weeks of record lows for that loan.

The average rate for the one-year adjustable-rate mortgage fell to 2.90 percent from 2.95 percent. Its average of 2.81 percent last month was the lowest on records going back to 1984.

The average fees on the five-year loan stayed at 0.6; and the one-year rose to 0.6.