Mortgage Rates Rise ... But That's Good

Posted: August 17, 2012

WASHINGTON - Average U.S. rates on fixed mortgages ticked up for the third straight week, staying slightly above record lows. Cheap mortgages have helped fuel a modest housing recovery this year.

Mortgage buyer Freddie Mac says the rate on the 30-year loan increased to 3.62 percent, up from 3.59 percent last week. Three weeks ago, the rate fell to 3.49 percent, the lowest since long-term mortgages began in the 1950s.

The average rate on the 15-year fixed mortgage, a popular refinancing option, rose to 2.88 percent. That's up from 2.84 percent last week and record low of 2.80 percent three weeks ago.

The availability of low rates has lifted home sales higher this year. Home prices have also increased, largely because the supply of homes has shrunk while sales have risen.

Homebuilders broke ground on slightly fewer homes in July, down from June when they started homes at the fastest pace since October 2008. Single-family homes and apartments started in July dipped 1.1 percent to a seasonally adjusted annual rate of 746,000, the government said Thursday.

Still, builders in July requested the most building permits since August 2008, suggesting that many expect demand for newly built homes to rise in the months ahead.

The pace of home sales remains well below healthy levels, though. Many people are still having difficulty qualifying for home loans or can't afford larger down payments required by banks.

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