U.S. mortgage rates have fallen for the first time in five weeks, retreating from an eight-month high and remaining near historically low levels, a closely watched mortgage survey showed on Thursday.

The move should bode well for the hard-hit housing market, making homes more affordable during the most important period, the spring selling season.

Interest rates on U.S. 30-year fixed-rate mortgages, the most widely used loan, averaged 5.07 percent for the week ended April 15, down from the previous week's 5.21 percent, which was its highest in eight months, according to a survey released by Freddie Mac, the country's second-largest mortgage finance company.

That is up from 4.82 percent a year ago as well as the record low of 4.71 percent seen in early December. Freddie Mac started the survey in 1971.

After rising for four consecutive weeks, mortgage rates eased back to where they were two weeks ago and still remain historically low, Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement.

Mortgage rates are linked to yields on Treasuries and yields on mortgage-backed securities.

Rates are widely expected to rise this year as the economy improves and after the Federal Reserve ended its program of purchases of mortgage-related securities last month.

Earl Lee, president of Prudential Real Estate and Relocation Services, based in Scottsdale, Arizona, said he has seen home sales pick up, with first-time home buyers competing for homes.

The federal government's $8,000 first-time home buyer tax credit and a $6,500 credit for home owners buying a new residence will soon expire. Eligible borrowers must sign contracts by April 30 and close loans by June 30.

Emotionally I would like to see mortgage rates go lower, but factually they are destined to go higher, Lee said.

Some home buyers are so hung up on home prices right now, waiting for them to fall further, but higher mortgages rates could end up offsetting that benefit, he said.

LOW RATES, LIMITED APPEAL

The Mortgage Bankers Association said on Wednesday U.S. mortgage applications fell for a second straight week, with a slump in demand for government loans driving activity to its lowest level in three months.

Freddie Mac said the 15-year fixed-rate mortgage averaged 4.40 percent in the latest week, down from 4.52 percent the prior week.

Interest rates on other types of loans fell.

One-year adjustable-rate mortgages (ARMs) were 4.13 percent in the latest week, down from 4.14 percent a week earlier. The rate on the 5/1 ARM, set at a fixed rate for five years and adjustable each following year, was 4.08 percent, compared with 4.25 percent a week earlier.

A year ago, 15-year mortgages averaged 4.48 percent, the one-year ARM 4.91 percent and the 5/1 ARM 4.88 percent.

(Editing by Patrick Graham)

Arizona Freddie mac Mortgage Fall