Mortgage rates were up slightly this week following an upbeat employment report showing that the economy added 155,000 jobs in December, 2012.

At 7.8 percent, the unemployment rate is now at its lowest point since December 2008. If unemployment continues to drop, the Federal Reserve is expected to scale back or end measures aimed at keeping long-term interest rates low.

Rates on 30-year fixed-rate mortgages averaged 3.4 percent with an average 0.7 point for the week ending Jan. 10, up from 3.34 percent last week but down from 3.89 percent a year ago. Rates on 30-year fixed-rate loans hit a low in Freddie Mac records dating to 1971 of 3.31 percent during the week ending Nov. 21, 2012.

For 15-year fixed-rate mortgages, rates averaged 2.66 percent with an average 0.7 point, up from 2.64 percent last week but down from 3.16 percent a year ago. Rates on 15-year fixed-rate loans hit a low in Freddie Mac records dating to 1991 of 2.63 percent during the week ending Nov. 21, 2012.

To keep mortgage rates low, the Federal Reserve is buying $40 billion in mortgage-backed securities (MBS) issued by Fannie Mae and Freddie Mac each month. The Fed has said the open-ended program, which also includes $45 billion in monthly purchases of long-term Treasurys, will continue as long as the outlook for the labor market does not “improve substantially.”

The Fed intends to keep short-term interest rates at or near zero percent for as long as unemployment is above 6.5 percent and its projections show inflation remaining in check.

Due to the low rates, refi applications have been piled up and it takes average of 90 days for most lenders to process the refi applications. If you plan to refi while the rates are still low, we would recommend to talk to your lender today and to start the process sooner the better.