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Mortgage rates inch higher, Freddie Mac says

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Confidence in the economic recovery is rising.

And, a little at a time, so are rates on residential loans.

The latest report from mortgage finance giant Freddie Mac says lenders were offering 30-year fixed-rate home loans at an average 4.80% this week to borrowers with solid credit and 20% down payments or home equity. That compared with 4.74% last week.

The offering rate on a 15-year fixed loan averaged 4.09%, up from 4.05%, according to the report Thursday morning.

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The rates were available to borrowers paying 0.7% of the loan amount in upfront lender charges. Borrowers can lower their rates by paying additional points.

The start rates on one-year adjustable loans and variable mortgages with the first five years at a fixed rate rose as well, Freddie Mac said.

Rates on jumbo loans -- those for more than $729,750 in expensive areas of California -- were running half a percentage point higher this week, according to the rate-tracking site FreeRateUpdate.com.

Economists said the rates are following the yield on bonds higher as a result of reports suggesting a stronger economy -- and thus a greater chance of the Federal Reserve moving interest rates higher to check inflation.

The index of leading indicators rose 1% in December, the sixth consecutive monthly increase, according to the Conference Board, which also reported that consumer confidence in January had risen to an eight-month high.

From Freddie Mac chief economist Frank Nothaft:

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‘Consumer demand in the housing market is also showing some positive gains. Sales of existing homes rose in December to the strongest pace since May and sales of new homes jumped to the highest since April. At their current sales rate, the expected time on the market fell from 9.5 to 8.1 months for existing houses and fell from 8.4 to 6.9 months for new homes.’

Be that as it may, the battered housing markets clearly have their problems, including prices that are falling in most of the country -- the dreaded ‘double dip,’ as my colleague Alejandro Lazo reported here.

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-- E. Scott Reckard

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