WASHINGTON – Rates on 30-year mortgages jumped to the highest level in more than two years this week as financial markets grew more concerned about inflation.
Mortgage giant Freddie Mac reported Thursday that the nationwide average for 30-year, fixed-rate mortgages rose to 6.36 percent, up from 6.31 percent last week. That was the highest level since 30-year mortgages were at 6.44 percent in early September 2003.
"News that wages grew faster than had been expected in October reinforced fears of inflation in the financial markets and that bumped up interest rates again this week," said Frank Nothaft, Freddie Mac's chief economist.
He said that government reports due out next week on inflation in October will be watched closely by investors to see if huge increases in energy costs are beginning to show up in the "core" inflation rate, which excludes energy and food.
The nation's housing market has been booming with sales of both new and existing homes expected to set records for the fifth consecutive year. But economists are forecasting that the sales pace will slow next year under the impact of higher mortgage rates.
Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing a home mortgage, averaged 5.89 percent this week, up from 5.85 percent last week.
One-year adjustable rate mortgages rose to 5.12 percent, up from 5.09 percent last week.
Rates on five-year hybrid adjustable rate mortgages averaged 5.81 percent this week, up from 5.76 percent last week.
The nationwide averages for mortgage rates do not include add-on fees known as points. The 30-year mortgage carried a nationwide average fee of 0.5 point while all the other categories carried a nationwide average fee of 0.6 point.
A year ago, 30-year mortgages averaged 5.76 percent, 15-year mortgages were at 5.16 percent and one-year ARMs averaged 4.16 percent. Freddie Mac does not have historical data on the five-year ARM which it began tracking this year.