Mortgage Rates Top 4 Percent The average rate on a 30-year fixed mortgage has topped 4% for the first time since late October but the increase isn't expected to derail budding signs of strengthening in the U.S. housing market. Mortgage giant Freddie Mac said Thursday that the average rate on 30-year loans jumped to 4.08% this week, up from 3.88% two weeks ago. Mortgage rates, which have been at or near record lows for months, are rising with higher yields on 10-year Treasury notes and the improving economy. They may go higher. Freddie Mac expects 30-year fixed-rate loans to be nearer to 4.25% to 4.5% by the end of the year, says Freddie Mac chief economist Frank Nothaft. Higher mortgage rates are historically bad news for housing, but their impact will be tempered by: â¢Still super-low rates. Even with increases, mortgage rates are still "extraordinarily low," Nothaft says. From 1990 through 2010, mortgage rates averaged 7.1%. â¢Mortgage affordability. Nationwide, home prices are nearly 34% below their 2006 peak. For mortgage affordability to return to the average level seen between 1990 and 2008, 30-year mortgage rates would need to rise to 9%, Capital Economics says. With home prices still falling in many markets, the latest mortgage rate increases "won't put the brakes on the recovery," says Paul Dales of Capital Economics. â¢Other economic concerns. With unemployment still high at 8.3% and lending standards still tight, borrowers' outlook on the economy is likely to influence housing demand more than slightly rising mortgage rates, says David Crowe, chief economist for the National Association of Home Builders. Instead of dampening demand, rising rates may "get a few people off the fence" and into buying, Crowe says. That's more likely for people who are considering refinancing, says Jed Kolko, Trulia economist. He says rising rates "might slow the (housing market's) momentum slightly but not more than that." Higher rates are arriving amid mixed economic data on housing's improvement. Sales of existing homes slipped in February from January but were still 9% higher than a year ago â which was a dismally bad year. Also last month, building permits for single-family homes, which signal future construction, reached their highest rate in 22 months. Still, rising mortgage rates are "one more reason" why the housing market's recovery will be "slow and steady rather than speedy and spectacular," Capital Economics says. For the week ending Thursday, the average on 15-year fixed mortgages rose to 3.3%, from 3.16% last week, Freddie Mac said.