Record-low mortgage interest rates have provided a considerable boost to the housing sector’s gradual recovery, with 30-year rates lingering at or below the 5 percent mark for a large part of 2009, according to Freddie Mac’s “Primary Mortgage Market Survey”:http://www.freddiemac.com/pmms/index.html?year=2009. But average rates for 30-year fixed mortgages ended the year above 5 percent, the GSE reported, perhaps signaling a trend of rate increases as we head into 2010.

For the week ending December 31, 2009, Freddie Mac’s study shows the 30-year fixed-rate mortgage (FRM) averaged 5.14 percent (0.7 point), after rising to 5.05 percent the previous week and breaking a seven-week run where rates sat well below the 5 percent threshold.

Despite the jump, Freddie Mac’s chief economist Frank Nothaft says rates still remain extremely affordable by historical standards. “Based on today’s median loan amount of $138,000, monthly principal and interest payments for a 30-year fixed-rate mortgage are close to one-third less than a decade ago when rates peaked at 8.6 percent,” Nothaft explained. “This translates into almost 50 percent less in interest payments over the full 30-year term.”

While a 30-year mortgage has typically been the loan of choice for homeowners looking to lower their payments by refinancing, new data shows that a larger number of borrowers are opting for a new mortgage with a 15-year term in order to pay off their home loan faster, even if it means higher payments – evidence that the credit crisis has triggered a shift in homeowners’ attitudes about debt.

According to a recent report from American Banking News, through November, Wells Fargo saw 15-year mortgage originations increase by 55 percent from a year earlier. JPMorgan Chase reports that 15-year loans now make up 20 percent of its refinances, the publication said, up from 10 percent a year ago.

The Mortgage Bankers Association reports similar results. The trade group says that nearly one in five refinance applications in October of 2009 were for 15-year fixed mortgages. In October 2008, they accounted for 9.1 percent of refinances, and 7.5 percent in October 2007.

Freddie Mac’s latest rate study shows that the 15-year FRM averaged 4.54 percent (0.7 point) during the last week of 2009, but it too is rising. Mortgage rates for 15-year loans are up from their average of 4.45 percent the week before.

Five-year adjustable-rate mortgages (ARMs) averaged 4.44 percent (0.6 point) last week, according to Freddie Mac’s survey. The 1-year ARM averaged 4.33 percent (0.6 point).

Interest rates for home loans have already begun heading upward, and many economists and market observers expect them to head even higher as the Federal Reserve winds down its program to buy $1.25 trillion in mortgage-backed securities during the first part of 2010.

The Fed’s initiative to purchase mortgage bonds guaranteed by Freddie Mac, Fannie Mae, and Ginnie Mae began back in January of 2009 and has succeeded in bringing homebuyers’ borrowing costs down to more affordable levels. Of the $5.4 trillion securities market held by these three agencies, the central bank has already acquired a net $1.1 trillion.

As the Fed moves out, yields on these mortgage bonds are expected to widen considerably. Bloomberg News says this means loan rates are likely to end 2010 almost 0.75 percentage point higher than they are currently, further adding to the challenges of a housing market struggling to recover from its worst slump since the 1930s.