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30-Year Mortgage Interest Rates Jump

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The Associated Press

Published: June 13, 2008

WASHINGTON - Rates on 30-year mortgages jumped to the highest level in nearly eight months, reflecting increased concerns about what the Federal Reserve might do to battle inflation.
Mortgage company Freddie Mac reported Thursday that 30-year fixed-rate mortgages averaged 6.32 percent this week. That was up sharply from 6.09 percent this past week.

It was the highest level for 30-year mortgages since they averaged 6.33 percent for the week of Oct. 25.

Analysts attributed the big jump to increased concerns in financial markets that the Federal Reserve might be preparing to start raising interest rates to make sure inflation does not get out of control.

"Mortgage rates jumped this week after a number of Federal Reserve officials ... expressed concern over a threat of inflation," said Frank Nothaft, Freddie Mac's chief economist.

In a speech Monday, Federal Reserve Chairman Ben Bernanke signaled deepening worries about inflation and said the Fed would "strongly resist" any tendency for Americans' expectations about price increases to become unsettled.

Those comments have led many investors to move up the date when they think the Fed might start raising interest rates to sometime later this year. From last September through April, the central bank was aggressively cutting rates to try to keep the economy from falling into a recession.

Other types of mortgages showed increases this week, according to the Freddie Mac survey, including rates on 15-year fixed-rate mortgages, which rose to 5.93 percent, up from 5.65 percent last week.

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