Mortgage rates extended their climb for the fifth straight week, skyrocketing to highs not seen in nearly a year, according to a weekly survey released by finance company Freddie Mac
This week's jump in average interest rates on thirty-year mortgages, to 6.74 percent from 6.53 percent last week, was the largest in three years, Freddie Mac said. It was spurred by concerns about inflation and strength in consumer and business spending, the mortgage giant said.
The last time the rates were higher was the July 20 week in 2006, when they averaged 6.80 percent.
The 30-year mortgage rates, the benchmark for the mortgage industry, have surged by 0.59 of a percentage point from 6.15 percent in the week ending on May 15.
Fifteen-year mortgage rates this week also soared, to 6.43 percent from 6.22 percent. That was the highest since 6.44 percent in the July 6 week last year.
"These (mortgage rate) moves parallel rising yields on Treasury securities, as concerns about inflation pressures and continuing strength of consumer and business spending have dimmed hopes for an interest rate cut," said Frank Nothaft, Freddie Mac vice president and chief economist.
He added: "Higher mortgage rates may weigh on the housing market's gradual recovery. While demand appears to have stabilized, inventories of new homes remain high, putting downward pressure on construction and home prices."
With such spikes in 30-year and 15-year mortgage interest rates exceeded their year-ago levels. During the same week last year, 30-year mortgages averaged 6.63 percent and 15-years averaged 6.25 percent.
This week, one-year adjustable rate mortgages (ARM) averaged 5.75 percent up from 5.65 percent last week and from 5.66 percent a year earlier. The "5/1" ARM, set at a fixed rate for five years and adjustable each following year, averaged 6.37 percent, up from 6.24 percent last week.
Freddie Mac said lenders charged an average of 0.4 percent in fees and points on 30- and 15-year mortgages, both unchanged since May 17. Fees on the one-year ARM averaged 0.7 percent, the same as last week, and 0.5 percent on the 5/1 ARM, down from last week's 0.6 percent.
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.