Mortgage interest rates increased during the week ended December 17 as the economy showed continued signs it is climbing out of the recession.

According to the Primary Mortgage Market Survey conducted by Freddie Mac, the interest rate for the 30-year fixed-rate mortgage (FRM) jumped to 4.94 percent with 0.7 point from an average of 4.81 percent with 0.7 point during the week ended December 10.

The increase in the rate for the 15-year FRM was less sharp but rates did average 4.38 percent with 0.6 point compared to 4.32 percent with 0.6 point the week before.

The rate for the 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) increased by 11 basis points to 4.37 percent.  Fees and points were unchanged at 0.6 point.

The 1-year Treasury-indexed ARM rose to 4.34 percent with 0.5 point from 4.24 percent also with 0.5 point.

Frank Nothaft, Freddie Mac vice president and chief economist said, "Mortgage rates followed bond yields higher once again this week amid signs of an improving economy. On the consumer side, retail sales jumped 1.3 percent in November and consumer sentiment, as measured by the University of Michigan, rose above the market consensus forecast to the highest reading since September.  Industrial production also showed large gains in November.

"Interest rates on 30-year fixed-rate mortgages have remained below five percent over the past seven weeks and are contributing to a wave of refinance activity.  Roughly three out of four mortgage applications were for refinancing during the first two weeks of December, according the Mortgage Bankers Association."

Fanny Mae's Weekly Yields were also up for the week.  The conventional 30-year FRM had an average yield of 4.61 percent during the week ended December 11 compared to a yield of 4.54 percent one week earlier.  The 15-year FRM rose three basis points to 3.94 percent while the government guaranteed FHA/VA 30-year FRM averaged 5.5 percent compared to 5.45 a week earlier.

The 1-year ARM had an average rate of 3.01 percent.  The yield during the week ended December 4 was 2.95 percent.

All Fannie Mae yields are reported net of servicing fees.