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Mortgage rates rise for the first time since late March

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WASHINGTON -- Rates on 30-year mortgages, after falling for five straight weeks, edged up a bit this week, reflecting in part indications that the recent economic slowdown would be short-lived.

Mortgage giant Freddie Mac reported Thursday in its weekly survey that rates on 30-year, fixed-rate mortgages averaged 5.77 percent this week, up from 5.75 percent last week.

It marked the first increase in rates since March 31 when the 30-year hit 6.04 percent, the high point so far this year.

Analysts attributed this week's increase to stronger-than-expected economic reports including news that the economy added 274,000 jobs in April. But analysts said they did not expect mortgage rates to rise quickly, given continued uncertainty about the economy's direction.

"The bond market isn't exactly sure how fast or slow the economy will expand in the long term and thus bond yields have remained remarkably low," said Frank Nothaft, Freddie Mac's chief economist.

The housing market has continued at a strong pace this year, reflecting the still historically low mortgage rates.

Analysts predicted that mortgage rates will rise in the months ahead but at a gradual pace that would leave the 30-year mortgage at around 6.5 percent by the end of the year.

Borrowing costs for other types of mortgages also rose this week, Freddie Mac reported.

Rates on 15-year, fixed-rate mortgages, a popular option for refinancing, rose to 5.33 percent, up from 5.31 percent last week while rates on one-year adjustable rate mortgages edged up to 4.23 percent, compared to 4.22 percent last week.

Rates on five-year hybrid adjustable rate mortgages rose to 5.21 percent, up from 5.16 percent last week. These hybrid mortgages have a fixed-rate for five years and then adjust each year after that.

The nationwide averages for mortgage rates do not include add-on fees known as points. The 30-year mortgage carried a nationwide average fee of 0.5 point while the other three mortgage categories carried an average fee of 0.6 point.

A year ago, 30-year mortgages averaged 6.34 percent, 15-year mortgages were at 5.72 percent and one-year ARMs averaged 3.90 percent. Freddie Mac does not have historical data on the five-year ARM which it began tracking this year.

On the Net:

Freddie Mac: www.freddiemac.com

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