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Fixed mortgage rates rise slightly, but 30-year loans stay below 5%; Housing market slow as prices dip

Fixed mortgage rates rose slightly this week, but the average rate on the 30-year loan remained below 5 percent.

Freddie Mac says the average rate on the 30-year fixed mortgage rose to 4.86 percent, from 4.81 percent the previous week. It hit a 40-year low of 4.17 percent in November.

The average rate on the 15-year fixed mortgage increased to 4.09 percent, from 4.04 percent. It reached 3.57 percent in November, the lowest level on records dating from 1991.

Mortgage rates tend to track the yield on the 10-year Treasury note, which rose this week. Investors sold off Treasurys on fears that the Federal Reserve might end its bond-buying program sooner than expected.

Low rates have done little to jump-start the weak housing market. Home sales remain sluggish, and prices are falling in most major markets. Most analysts expect prices to decline through midyear.

More Americans did sign contracts to buy homes last month, the National Association of Realtors said Monday. But there was "a measurable level of contract cancellations" in February, meaning that many pending sales might not translate into closed sales.

In another dismal sign, Lennar Corp. said Tuesday that new orders dropped 12 percent from December through February, while home deliveries slipped by 3 percent.

High unemployment and strict lending requirements have kept many people from buying homes. And a record number of foreclosures are forcing down home prices, leaving many would-be buyers worried that the market has yet to bottom out.

To calculate average mortgage rates, Freddie Mac collects rates from lenders across the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a single day.

The average rate on a five-year adjustable-rate mortgage, or ARM, rose to 3.70 percent, from 3.62 percent. The five-year hit 3.25 percent last month, the lowest rate on records dating from January 2005.

The average rate on one-year adjustable-rate home loans increased to 3.26 percent, from 3.21 percent. Two weeks ago, the rate hit 3.17 percent, the lowest level in records dating from 1984.

The rates do not include add-on fees, known as points. One point is equal to 1 percent of the total loan amount. The average fee for the 30-year fixed loan, 15-year fixed loan and the five-year ARM in Freddie Mac's survey was 0.7 point. The average fee for the 1-year ARM was 0.6 point.

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