Average U.S. rate on 30-year mortgage rises to 3.89 percent

WASHINGTON (AP) — Average long-term U.S. mortgage rates rose last week after a sharp drop the previous week, as global markets continued to whipsaw amid economic disruption in China and uncertainty over Federal Reserve interest-rate policy.

Mortgage giant Freddie Mac said Thursday that the average rate on a 30-year fixed-rate mortgage increased to 3.89 percent from 3.84 percent a week earlier.

The rate on 15-year fixed-rate mortgages advanced to 3.09 percent from 3.06 percent.

The rates remain well below their levels of a year ago, when the 30-year loan rate was 4.10 percent and the 15-year rate was 3.24 percent.

Mortgage rates have been tracking the yield on the 10-year Treasury bond, as investors have fled turbulent stock markets in recent weeks for the safety of U.S. government bonds, and then markets have sharply recovered.

As the markets have gyrated, investors and economic observers are straining to figure out whether the Fed will raise a key interest rate this month, as has been long anticipated.

A rate hike by the Fed could bring higher rates for home loans. The Fed has kept its key short-term rate near zero since the financial crisis struck seven years ago.

Fed Vice Chairman Stanley Fischer left the door open for a Fed rate increase this month, saying the factors that have kept inflation below the central bank’s target level have likely begun to fade.