NEW YORK - U.S. 30-year fixed-rate mortgages, the most widely used loan, rose for a second straight week, hitting a key level that may cut into demand.

The rates averaged 5.00 percent for the week ending Oct. 22, up from the previous week's 4.92 percent, according to a survey released on Thursday by home funding company Freddie Mac.

Many industry experts view 5 percent as a key psychological level. When rates drop below it, home loan demand tends to rise, while the opposite holds true when rates rise.

Leif Thomsen, CEO of Mortgage Master, in Walpole, Massachusetts, said the Nov. 30 expiration of the $8,000 tax credit for first-time home buyers is impacting demand.

People are realizing that they are going to be unable to close the deal in that time to take advantage of the tax credit and are waiting to see if it is going to be extended -- which I feel it definitely should be, he said.

Still, mortgage rates remain low. A year ago, 30-year mortgage rates averaged 6.04 percent. The rate is significantly higher than the record low of 4.78 percent set in the week ended April 2.

Following bond yields, long-term mortgages rates edged up slightly this week, Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement.

Mortgage rates are linked to both Treasury and MBS yields. Freddie Mac started the survey in 1971.

Separately, the Mortgage Bankers Association said home loan demand fell last week for a second straight week.

Freddie Mac said the 15-year fixed-rate mortgage averaged 4.43 percent in the latest week, up from 4.37 percent the prior week.

One-year adjustable-rate mortgages (ARMs), were 4.54 percent, down from 4.60 percent last week. Freddie Mac said the 5/1 ARM, set at a fixed rate for five years and adjustable each following year, was 4.40 percent, compared with 4.38 percent a week earlier. A year ago, 15-year mortgages averaged 5.72 percent, the one-year ARM 5.23 percent and the 5/1 ARM 6.06 percent.

Freddie Mac and its larger sibling, Fannie Mae, were placed under government conservatorship in early September, 2008. 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.

(Editing by Kenneth Barry)