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Mortgage rates reversed course this week, with averages on fixed-rate mortgages posting their first increases in six weeks, according to the weekly Freddie Mac rate survey.

Average interest rates on standard 30-year fixed-rate loans rose by six basis points, up to 3.55 percent, compared to their record low of 3.49 percent last week. Averages on 15-year fixed-rate mortgages also came off their record lows, increased to 2.83 percent from last week's mark of 2.80 percent.

A smaller increase was seen on initial rates for 5-year adjustable-rate mortgages (ARMs), which rose to an average of 2.75 percent, up from 2.74 percent previously.

Upturn linked to positive Euro news

Rates headed upward following news of additional debt relief for financially stressed nations in the Eurozone, lessening the likelihood that the debt crisis there will drag down the recovering U.S. economy along with it.

Other economic signs were more mixed, however. Standard & Poor's reported that U.S. home prices rose for a fourth consecutive month in May, with nearly all cities in the 20-city survey showing gains. At the same time, the National Association of Realtors reported that contracts signed for pending home sales fell in June, following a previously announced drop in actual home sales for the month.

Consumers upbeat despite slowdown

Those reports came amid news that the U.S. economy appears to be slowing, with the gross domestic product (GDP) increasing at an anemic annual rate of 1.5 percent in the second quarter of the year, following 2.0 percent growth in the first. Even so, consumer confidence rose in July for the first time in five months, according to the monthly survey from the Conference Board.

Mortgage rates typically rise on good economic news and fall on bad, since increased demand for capital tends to drive up the cost of borrowing.

First published at: http://www.mortgageloan.com/mortgage-rates-reverse-decline-9191

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