Average US rate on 30-year mortgage rises to 3.89 percent

Mortgage giant Freddie Mac said Thursday that the average rate on a 30-year fixed-rate mortgage increased to 3.89 percent from 3.84 percent a week earlier. The rate on 15-year fixed-rate mortgages advanced to 3.09 percent from 3.06 percent.

The rates remain well below their levels of a year ago, when the 30-year loan rate was 4.10 percent and the 15-year rate was 3.24 percent.

Mortgage rates have been tracking the yield on the 10-year Treasury bond, as investors have fled turbulent stock markets in recent weeks for the safety of U.S. government bonds, and then markets have sharply recovered.

An increase in bond prices reduces their yields, and vice versa. The yield on the 10-year bond, which dipped below 2 percent early last week when stocks plunged on Wall Street, recovered to 2.19 percent Wednesday as the market rebounded. That was close to its level of 2.18 percent last Wednesday. The yield was at 2.17 percent Thursday morning.

As the markets have gyrated, investors and economic observers are straining to figure out whether the Fed will raise a key interest rate this month, as has been long anticipated. A rate hike by the Fed could bring higher rates for home loans. The Fed has kept its key short-term rate near zero since the financial crisis struck seven years ago.

Fed Vice Chairman Stanley Fischer left the door open for a Fed rate increase this month, saying Saturday that the factors that have kept inflation below the central bank's target level have likely begun to fade. Fischer said, for example, that some effects of a stronger dollar and a plunge in oil prices — key factors in holding down inflation — have already started to diminish.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage was unchanged from last week at 0.6 point. The fee for a 15-year loan also held steady at 0.6 point.

The average rate on five-year adjustable-rate mortgages rose to 2.93 percent from 2.90 percent; the fee remained at 0.4 percent. The average rate on one-year ARMs was unchanged at 2.62 percent; the fee held at 0.3 point.