The Truth About Mortgage.com

Mortgage rates rose for the second week in a row as related bond yields climbed higher, mortgage financier Freddie Mac said today.

The popular 30-year fixed increased to 5.25 percent for the week ending July 30, up from 5.20 percent last week, but well below the 6.52 percent seen a year ago.

The 15-year fixed climbed a single basis point to 4.69 percent, though it still sits firmly below the 6.07 percent average seen this time last year.

“Bond yields rose slightly higher this week on market optimism that the economy may be stabilizing somewhat, and mortgage rates followed,” said Freddie Mac chief economist Frank Nothaft.

As I’ve previously mentioned, good news tends to lead to a rise in interest rates (how mortgage rates move), which makes it difficult to solve the current mortgage crisis by manipulating rates.

Adjustable-rate mortgages were heading in a similar direction, with the five-year ARM up a single basis point to 4.75 percent and the one-year ARM averaging 4.80 percent, up from 4.77 percent.

A year ago, the five-year averaged 6.07 percent and the one-year stood at 5.27 percent.

These rates are good for conforming loan amounts with a down payment of at least 20 percent; jumbo loans continue to price about a percentage point higher.

Yesterday, the MBA said mortgage application volume fell for the first time in three weeks, thanks to a 10.9 percent drop in refinance demand.