Average US rate on 30-year mortgage declines to 3.95 pct.; 15-year loan unchanged at 3.18 pct.

WASHINGTON – Average long-term U.S. mortgage rates slipped this week after they climbed recently expectations that the Federal Reserve may soon raise its key short-term interest rate.

Mortgage buyer Freddie Mac said Wednesday the average rate on a 30-year fixed-rate mortgage slipped to 3.95 per cent from 3.97 per cent a week earlier. The key 30-year rate was nearly unchanged from its level of a year ago, 3.97 per cent. But the average has increased over the past months from 3.76 at the end of October.

The average on 15-year fixed-rate mortgages was unchanged at 3.18 per cent from 3.20.

Rates have risen in recent weeks as some of the global economic turmoil has calmed down. Foreign buyers poured into 10-year U.S. Treasury bonds in October, temporarily depressing mortgage rates that have since risen as the market focus has returned to the Fed.

At a December meeting, Fed officials are expected to raise the federal funds rate — the interest banks charge each other overnight — for the first time in nearly a decade. This crucial short-term rate can influence lending to consumers and businesses such that an increase from the current near-zero level might limit borrowing. Some Fed policymakers have indicated that the 5 per cent unemployment rate and potential for rising inflation levels merit a rate increase, signalling the end of extraordinary stimulus measures that began during the Great Recession.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 per cent of the loan amount.

The average fee for a 30-year mortgage increased to 0.7 point from 0.6 point last week. The fee for a 15-year loan was unchanged at 0.6 point.

The average rate on five-year adjustable-rate mortgages rose 3.01 per cent from 2.98 per cent; the fee was unchanged at 0.5 point. The average rate on one-year ARMs edged down to 2.59 per cent from 2.64 per cent; the fee was unchanged at 0.3 point.