The Wall Street Journal is reporting today that mortgage rates rose in the latest week, leaving the average rate on 30-year fixed-rate mortgages closer to 5%, according to a weekly survey by Freddie Mac.

"Mortgage rates followed bond yields a little higher this week amid positive data reports from the Conference Board that suggest the economy is strengthening," said Freddie Chief Economist Frank Nothaft.

Rates had slumped for months, setting repeated all-time lows in the process, as yields on Treasurys slid amid economic uncertainty. But those yields have risen recently, pulling rates higher. Mortgage rates generally track the yields, which move inversely to Treasury prices.

The 30-year fixed-rate mortgage averaged 4.8% for the week ended Thursday, up slightly from the prior week's 4.74% average but down from 4.98% a year ago. Rates on 15-year fixed-rate mortgages were 4.09%, up from 4.05% in the previous week but down from 4.39% a year earlier.

Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 3.70%, up from the prior week's 3.69% but down from 4.25% a year earlier. One-year Treasury-indexed ARMs were 3.26%, up from 3.25% in the prior week but down from 4.29% a year earlier.

To obtain the rates, borrowers had to pay an average of 0.6 point on the one-year adjustable-rate mortgages; the others required an average 0.7 point. A point is 1% of the mortgage amount, charged as prepaid interest.

 

Chicago Marketwatch is reporting another rise in mortgage fees - even for those with good credit scores.

In industry-speak, the fees are called “loan-level price adjustments” and new ones will go into effect April 1. The fees for conforming mortgages have been adjusted various times during the housing crisis, but this latest revision is an example of how even years into the housing downturn underwriting continues to tighten.

“It’s not so much that this is really tightening significantly, it’s that it’s getting tighter. It’s not getting easier,” said Cameron Findlay, chief economist for LendingTree, an online marketplace that connects consumers to lenders. “Consumers are looking for some relief, and what they’re getting is the opposite at this point. They’re getting ‘Sorry, there’s less that we can do for you than even a year ago.’”

Already, some lenders are incorporating the higher fees and passing them on to their customers. The April effective date is for when loans are delivered to Fannie Mae /quotes/comstock/11k!fnma (FNMA 0.46, -0.17, -26.62%) , but over the next couple of months, lenders will be originating loans that will be sold to Fannie in April. Most of the time, borrowers can pay the extra costs up front at origination or roll the cost into the interest rate.

“The majority price it into the rate,” said Rhonda Porter, a loan officer with Mortgage Master Service Corporation in Kent, Wash.

But the fees are anything but one-size-fits all: Fannie Mae releases a grid to lenders to explain the fees that individual loans are subject to for loans, based on a borrower’s credit score and loan-to-value.

n this latest iteration, a borrower wouldn’t be affected by a loan-level price adjustment if he or she had a FICO score above 740 and a loan-to-value of 75% or less, Findlay said. But a buyer with a standard 20% down payment (or 80% loan to value) and a 740 credit score could now face additional fees.

“It certainly says that even with a great credit score, they still see some risk in you,” he said.

An example of how the change could affect borrowers, in dollars: Before the new adjustment, someone with a 700 FICO score and a $160,000 mortgage to purchase a $200,000 home (80% loan-to-value), might have paid an additional $800 in these fees. Now, that cost would be doubled, meaning the loan’s risk-based pricing would equal $1,600, Findlay said.

Just a note: The fees don’t have an effect on loans insured by the Federal Housing Administration, which appeal to borrowers who need a low down payment loan, said Greg McBride, senior financial analyst for Bankrate.com. Also, not all lenders sell all mortgages to the secondary market, so not all loans are subjected to the fees — underscoring just how important it is to shop around and compare rates, he said.

Risk management

Why are the fees rising? Broadly, it’s because government-sponsored enterprises Fannie Mae and Freddie Mac /quotes/comstock/11k!fmcc (FMCC 0.56, -0.11, -15.98%)   are doing what they feel is necessary to manage risk at a time in which they still remain in government conservatorship. That means, ultimately, taxpayers assume the risk for these mortgages, McBride said.

“There’s an initiative for Fannie Mae and Freddie Mac to make sure that they’re buying quality paper,” he said.

But McBride cautions people from getting too worked up about fee increases: “If you are a consumer and you’re trying to gauge which way mortgage rates are going to go, the big drivers are still macro events such as economic news, the outlook for inflation, or any nervousness in the financial markets,” he said. “Those are the real drivers of mortgage rates day-to-day, week-to-week and month-to-month.”

Mortgage rates rose at the end of 2010, as the economy showed signs of improvement and the markets feared an increase in inflation. The conforming 30-year fixed-rate mortgage averaged 4.74% for the week ending Jan. 20, according to Freddie Mac’s weekly survey. For comparison, the rate averaged 4.23% for the month of October.

And if the economy stays on track toward recovery, rates could be higher than 5.5% for the second half of the year, McBride said.

Need to know

Still, consumers should be aware of these fee increases and take them as a reminder of how important it is to have the best credit score possible when shopping for a mortgage. And for some, it might make sense to postpone obtaining a mortgage until they’ve improved their credit.

“What could happen is that the people who are, let’s say, at a 675 score might end up waiting a couple of months because the difference between a 675 and 680 is big,” said Les Berman, a senior mortgage advisor with First Cal, a lender based in Petaluma, Calif. To improve your credit, pay your bills on time, and clear up any mistakes on your credit reports, he said. Also, aim to keep credit card balances low.

Taking time to improve your score could help you lock in a less expensive mortgage and be well worth the effort in the long run. And you have time: Home prices aren’t going to race up any time soon, McBride said.

“So as a borrower, if you feel you need to take a little more time to increase your savings, pay down your debt and improve your credit score, you can feel safe in doing so,” he said. “Even if we see a slight increase in mortgage rates, that could be offset if you put yourself in a higher credit score band in the interim.”

Yahoo published a very interesting list of tips for the 2011 real estate market for buyers and sellers. I've reprinted it below.

Tip 1: Sellers: Redefine "Market Value"

If your home has been on the market far too long, there's a good chance you're not facing market realities. The value of your home isn't what the tax assessor says it is, or the sum on that two-year-old appraisal you have filed away. It's not what a similar-size home that sold across town. It's what a buyer is willing to pay today. To arrive at that sum, the sales prices of foreclosures and short sales must be factored into the equation, along with the average value of seller concessions in your submarket. These factors are advanced by the Federal Housing Finance Agency, or FHFA, in its appraiser code-of-conduct revisions to ensure more accurate documentation of market conditions. If your agent tells you that you're overpricing your house, he or she may not just be trying to grease the wheels for a quick commish, as you might suspect.

Tip 2: Buyers: Hire Personal Peeps

As tempting as it is to share the seller's agent to save a couple grand, don't. The same goes for using the other party's inspector and appraiser. They were hired by the seller and have a fiduciary allegiance to the person who's paying them. Don't automatically opt for real estate professionals referred to you by your agent either. A huge capital purchase is not the time for such friendly accommodations. Briefly interview three of each by phone. Make sure your appraiser and your inspector (and perhaps a separate termite inspector) are appropriately state-licensed or state-certified and, ideally, have been practicing for at least five years and have done more than 200 inspections or appraisals. Compare the results of your inspector's findings with the inspection findings of the other party, and you're likely to stumble on disparities or omissions.

Tip 3: Sellers: Extend the Selling Season

Spring is the best time to find the broadest universe of buyers and sellers. Parents don't want to uproot their kids from schools mid-term and would like to settle in a new neighborhood by mid-summer. Many sell at the same time they buy. These days, "spring" really means late winter. So if you're going to sell in 2011, get your house ready for showings by late February. That will give you nearly five months until this buying-and-selling group starts dwindling by mid-July.

Tip 4: Buyers: Check the Seller's Addition

Based on mounting concerns expressed in Bankrate reader mail, prospective buyers should add the following move to their due diligence lists when scoping out a home: Check for illegal additions. Revenue-starved cities are cracking down on unpermitted work. They focus on current owners, not the original step-skipping "perps." Unpermitted room additions, kitchen remodels and garage conversions are just a few areas that can haunt an unsuspecting buyer. A good agent, home inspector or appraiser should be able to spot such unpermitted work, especially if square footage doesn't match tax assessor records. If you do buy unwittingly, you'll be responsible to bring the work up to code.

Tip 5: Sellers and Buyers: Gather Micro Data

Regional real estate sales information never tells the full tale of a housing market. Search local daily newspapers, business journals and websites to find the latest foreclosed homes, housing backlogs, current versus historic median selling prices, and the average time on the market of for-sale homes in your specific ZIP code, submarket or neighborhood. The website City-data.com is a good start for this.

On a broader scale, look at population income levels, unemployment rates and the contraction or expansion of major local employers. Homes near universities, hospitals and other major employment centers usually hold their value better and resell faster. A great product and great location, at least to some degree, will transcend local trends for buyers and sellers.

Tip 6: Buyers: Smoke Out Pervs

Do a sex-offender search. The National Association of Realtors, or NAR, says it's the job of local police agencies, not Realtors, to be gatekeepers of registered sex-offender data. So do your homework. The National Sex Offender Public Registry contains national offender listings. And know that most agents are obliged to honestly answer direct questions. So ask: Do any registered sex offenders currently live anywhere in the neighborhood? Do any former registered sex offenders live anywhere in the neighborhood?

Tip 7: Sellers: Feel What the Buyer Feels

Put your ego aside, sellers. Your for-sale home is no longer about you -- it's about the buyer. So be empathic. What would you expect to see on a tour of a for-sale home? Even though you're essentially marketing brick, mortar and land, the emotional response you elicit in a buyer is often what seals a deal. Neutral colors allow buyers to picture themselves in your house. To appeal to their olfactory pleasure senses, employ the age-old tactic of baking fresh cookies before potential buyers arrive -- then leave them for your visitors to enjoy. Or at least light a candle or two. To convey an inviting atmosphere, de-clutter the place with renewed vengeance, stow away your inexpensive or tattered furniture and box up cherished mementos. Remember that the illusion of space is almost as important as the space itself.

Tip 8: Buyers: Keep the Dream Alive After Foreclosure

Lost your home to foreclosure? In most cases, that won't keep you from owning another home as far into the future as you likely feared. It's true that a foreclosure can remain on your credit record for up to seven years, but government-backed mortgage guarantors Fannie Mae, Freddie Mac and FHA typically impose just a minimum of just three years before they'll back another home loan -- if your foreclosure was due to extenuating circumstances such as job loss, relocation or illness. Next time, you might be asked for a bigger down payment, as much as 20 percent, and slightly higher interest rates. So start saving now.

Tip 9: Buyers and Sellers: Set Your Goals in Writing

Certainly you should get all relevant real estate promises in writing, but that's not where we're headed. Keep a log of the entire process of buying or selling a home, including your objectives, home-tour dates, buyer and seller feedback, offers, expenses, contracts, repairs, contractors hired, agent communiques, neighborhood observations, everything. It will give you a clearer picture of what you've done, what you're doing and what to do next. Studies have shown that goals are more likely to become reality if you write them than if you don't.

Tip 10: Buyers: Play the Field

Don't leave yourself open to heartbreak. Buyers pursuing heavily discounted short-sale and auction homes should research several prospects, because there may be plenty of other suitors. Many a would-be buyer has been left at the altar of lofty expectations after watching another guy or gal swoop up that perfect home at the last minute for just a little more money. Most successful auction winners and short-sale buyers start out by targeting several homes so they won't be left in the lurch if, or when, one deal falls apart. With so many parties involved in these transactions, including brokers, agents, lawyers, loss mitigators, appraisers, lenders, special servicers and inspectors, a lot can go wrong. Some Realtors estimate only about one-fifth of attempted short sales are successful.