30-year mortgage rate rises to 5.85%

By Carlos Torres
Bloomberg News Service

WASHINGTON — U.S. mortgage rates rose this week to about the average for this year, according to Freddie Mac, the No. 2 buyer of mortgages. Rates are expected to stay close to record lows amid economic weakness.

The average rate on a 30-year fixed mortgage was 5.85 percent for the week that ends tomorrow, up from 5.79 percent. That compares with a record-low 5.61 percent in mid-March and an average of 5.84 percent since the start of this year. For the same period in 2002, the rate averaged 6.98 percent.

The Federal Home Mortgage Corp., commonly known as Freddie Mac, said a weak economy is holding interest rates down. Acceleration of the economy in the second half this year probably won't be rapid enough to force the rates to rise, according to Freddie Mac.

"We seem to be in another 'soft spot,' " said Frank Nothaft, the concern's chief economist.

"Mortgage rates are expected to remain low and house-price growth will continue to moderate, keeping housing affordable to a broader segment of the population," Nothaft said.

The average rate on a 15-year mortgage, a popular refinancing option, rose to 5.17 percent from 5.06 percent.

The average rate on a one-year adjustable-rate mortgage slipped to 3.80 percent from 3.82 percent.

This week's rate on a 30-year mortgage would put the average monthly payment on a $100,000 loan, including principal and interest with 1 point, at $589.94, down from $664.63 a year ago, when the rate was 6.99 percent.