U.S. fixed mortgage rates continue to rise with stronger economic outlook

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The mortgage giant said the 30-year fixed-rate mortgage (FRM) was 3.62 percent in the week ending August 16, up from last week's 3.59 percent. It has been below 4 percent all but one week in 2012.

The 15-year FRM, a popular choice for those looking to refinance, also increased to 2.88 percent from 2.84 percent a week earlier. It has been below 3 percent for 12 consecutive² weeks.

In addition, the 5-year Treasury³-indexed hybrid⁴ adjustable-rate mortgage (ARM) edged down to 2.76 percent, while the 1-year Treasury-indexed ARM was up to 2.69 percent.

Before locking in the low rates, borrowers have to pay banking⁵ service fees, also known as points, which are calculated as a percentage of the loan, typically between 0.4 to 0.6.

Low inflation and gradually stronger economic activity placed further upward pressure on long-term Treasury yields and in turn fixed mortgage rates, Freddie Mac said. Inflation remained in check, with 12-month growth in the core consumer price index falling for a second month to 2.1 percent in July. Meanwhile, industrial production rose 0.6 percent in July compared to a 0.1 percent increase in June and retail⁶ sales jumped 0.8 percent in July from a 0.7 percent decline in June.

Lower rates have played as an important incentive⁷ to house refinancing and buying since last fall. With constant modest improvement recently, the U.S. housing crash is said to have reached the bottom. However, many economists⁸ say the market still needs years to recover entirely⁹ as the bottom will be prolonged.

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