Mortgage rates surged for a second week in a row this week, with conservative investments like Treasury bonds and mortgage-backed securities looking less attractive to investors amid growing signs that an economic recovery is under way.

Rates on 30-year fixed-rate mortgages averaged 4.08 percent with an average of 0.8 point for the week ending March 22, up from 3.92 percent last week but still well below the 4.81 percent average at the same time last year, Freddie Mac said in releasing the results of its weekly Primary Mortgage Market Survey.

Mortgage rates surged for a second week in a row this week, with conservative investments like Treasury bonds and mortgage-backed securities looking less attractive to investors amid growing signs that an economic recovery is under way.

Rates on 30-year fixed-rate mortgages averaged 4.08 percent with an average of 0.8 point for the week ending March 22, up from 3.92 percent last week but still well below the 4.81 percent average at the same time last year, Freddie Mac said in releasing the results of its weekly Primary Mortgage Market Survey.

It was the first time since October that rates on the "plain vanilla" loan favored by most homebuyers have been above 4 percent. Rates on 30-year fixed-rate mortgages hit an all-time low in records dating to 1971 of 3.87 percent during the first three weeks of February.

A separate survey by the Mortgage Bankers Association showed that while demand for purchase loans was down only slightly last week, requests for refinancings fell 9.3 percent from week to week.

Freddie Mac’s survey showed rates on 15-year fixed-rate mortgages averaging 3.3 percent with an average 0.8 point, up from 3.16 percent last week but well below the 4.04 percent average registered a year ago. Rates on 15-year loans, which are popular with homeowners who are refinancing, hit a low in records dating to 1991 of 3.13 percent just two weeks ago.

Rates on five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans averaged 2.96 percent with an average 0.7 point, up from 2.83 percent last week but down from 3.62 percent a year ago. The five-year ARM hit a low in records dating to 2005 of 2.8 percent the week of Feb. 23.

For one-year Treasury-indexed ARM loans, rates averaged 2.84 percent with an average 0.6 point, up from 2.79 percent last week but down from 3.21 percent a year ago. Rates on one-year ARMs hit an all-time low in records dating to 1984 of 2.72 percent during the week ending March 1.

Lawrence Yun, chief economist for the National Association of Realtors, thinks that in the short run, fears that mortgage rates are headed up could spur buyer demand. If rates do rise significantly, that would reduce homebuyers’ purchase power and dent home sales.

But in a recent forecast, economists at Fannie Mae said they expect 30-year fixed-rate loans to climb only slightly this year, averaging 4.1 percent during the second half of 2012, and continue on a gentle upward slope to an average of 4.3 percent in 2013.

One reason mortgage rates have been low is that investors have viewed government-backed mortgage-backed securities as a low-risk alternative to stocks and other volatile investments. During the housing downturn, mortgage-backed securities backed by Fannie Mae, Freddie Mac and Ginnie Mae have been the source of funding for nine out of 10 U.S. mortgage loans.

But conservative investments like Treasurys and mortgage-backed securities are losing favor of late, amid signs that U.S. economic growth is picking up steam and unemployment is easing.

"Bond yields rose over the past two weeks in part due to an improving assessment of the state of the economy by the Federal Reserve, better-than-expected results of commercial bank stress tests, and the likelihood of a second bailout for Greece," said Freddie Mac’s chief economist, Frank Nothaft, in a statement.

Nothaft said mortgage rates "are catching up" with increases in Treasury yields.

Although some observers fear that the European debt crisis or a crisis in the Middle East that sends oil prices skyrocketing could still derail the global economy, stock markets are rebounding as more optimistic investors place bets on riskier investments.

Testifying before lawmakers Wednesday, Federal Reserve Chairman Ben Bernanke said recent reduction in financial stresses in Europe "is a welcome development for the United States." But Europe’s financial and economic situation remains difficult, he said, "and it is critical that the European leaders follow through on their policy commitments to ensure a lasting stabilization."

The Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending March 16 showed demand for purchase loans was down a seasonally adjusted 1 percent from a week earlier, and down 1.9 percent from a year ago.

The MBA survey showed revisions to the government’s Home Affordable Refinancing Program (HARP) are spurring demand in states where large numbers of homeowners are "underwater" on their loans.

The HARP program is intended to help homeowners who have little equity or who owe more on their mortgage their home is worth refinance into a loan with a lower interest rate. To boost lender participation in the voluntary program, Fannie Mae and Freddie Mac are releasing them from some legal liabilities associated with the original loan.

As the new HARP guidelines kicked in last month, refinancing applications shot up in the "sand states" where prices soared during the boom and plummeted in the bust. The MBA said refi applications were up 71 percent in Nevada from January to February, 61 percent in Arizona, and 49 percent in Florida.

"The states that I started referring to years ago as the sand states that had the worst delinquencies we now should start calling the HARP states for mortgage refinances," MBA Chief Economist Jay Brinkmann said in a statement.

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