U.S. mortgage rates rose in the latest week as Treasury yields climbed, according to a survey released on Thursday, a move that may dampen home loan demand.

Interest rates on U.S. 30-year fixed-rate mortgages averaged 5.29 percent for the week ending August 13, up from the previous week's 5.22 percent, said a survey released by home funding company Freddie Mac .

Mortgage rates remained above 5 percent for an eleventh straight week. Experts say mortgage rates at 5 percent and below are what is necessary to make a significant impact on home loan demand.

Higher rates have dampened demand for home loan refinancing, a reversal from earlier this year when rates below 5 percent caused refinancing activity to surge.

The mortgage rate was significantly higher than the record low of 4.78 percent set the week ended April 2. Freddie Mac started the Primary Mortgage Market Survey in 1971.

Home buying demand, however, is not as sensitive to changes in rates as in refinancing activity.

David Adamo, CEO of Luxury Mortgage in Stamford, Connecticut, said the overriding driver of the housing market at this point is confidence and not interest rates on mortgages.

Once the general psychology of the market place returns to normal we will see the purchase activity substantially improve which will restore our housing market and overall economy, he said.

Treasury yields, which are linked to mortgage rates, have risen recently, with mortgage rates responding in kind.

Long-term, fixed-rate mortgage rates rose slightly over the past week while initial rates on adjustable-rate mortgages (ARMs) were little changed, Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement.

The rise in rates is a negative for the U.S. housing market, which has been showing some signs of stabilization, with sales rising and home price declines moderating in many regions of the country.

In fact, home prices in some regions have risen.

Thirty-year mortgage rates had been on a downward trend for most of this year after the Federal Reserve unveiled its plan to buy mortgage-backed debt in late November. But the Fed met resistance in the bond market in recent months.

The U.S. government has embarked on an aggressive plan to bring mortgage rates down to levels that will spur demand and help the hard-hit housing market begin to recover.

The Federal Reserve has set a goal to buy up to $1.25 trillion of agency MBS, $300 billion of Treasuries and $200 billion of agency debt in 2009. The purchases are more than half-way completed and are part of efforts to lower borrowing costs.

The battered U.S. housing market, which has suffered the worst downturn since the Great Depression, is both the source and a major casualty of the credit crisis. A setback for the market could prolong a turnaround for the United States, the world's largest economy.

OTHER RATES MIXED

Freddie Mac said the 15-year fixed-rate mortgage averaged 4.68 percent in the latest week, up from 4.63 percent the prior week.

One-year adjustable-rate mortgages, or ARMs, fell to an average of 4.72 percent from 4.78 percent last week. Freddie Mac said the 5/1 ARM, set at a fixed rate for five years and adjustable each following year, averaged 4.75 percent, compared with 4.73 percent a week earlier.

A year ago, 30-year mortgage rates averaged 6.52 percent, 15-year mortgages were at 6.07 percent and the one-year ARM was at 5.18 percent. A year ago, the 5/1 ARM averaged 6.02 percent.

Lenders charged an average of 0.7 percent in fees and points on 30-year mortgages, up from 0.6 percent the previous week, while they charged an average 0.7 percent in fees and points on 15-year mortgages, up from 0.6 percent the previous week.

The 5/1 ARM fees and points were 0.6 percent, unchanged from the previous week. The one-year ARM fees and points were 0.4 percent, down from 0.5 percent the previous week.

Freddie Mac and its larger sibling, Fannie Mae, were placed under government conservatorship in early September.

Freddie Mac is a mortgage finance company chartered by Congress that buys mortgages from lenders and packages them into securities to sell to investors or to hold in its own portfolio.

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