Mortgage Rates Soar on Inflation Concerns

NEW YORK – Mortgage rates keep on climbing, with fixed rate mortgages hitting the highest point since July. The average 30-year fixed rate mortgage jumped from 6 percent to 6.15 percent, according to Bankrate.com’s weekly national survey of large lenders. The 30-year fixed rate mortgages in this week’s survey had an average of 0.37 discount and origination points.

The 15-year fixed rate mortgage, popular for refinancing, climbed from 5.56 percent to 5.67 percent, while the average rate for the jumbo 30-year fixed rate mortgage increased from 6.18 percent to 6.35 percent. Adjustable rate mortgages were no haven, with the average 5/1 adjustable rate mortgage rising to 5.58 percent and the one-year ARM hitting a two-and-a-half year high of 4.65 percent.

Mortgage rates have climbed more than half of one percentage point in the past six weeks. This week, bond investors were unnerved by the Federal Open Market Committee’s unexpectedly direct comments about inflation and a sharp increase in core consumer prices. As bond traders unloaded bonds, both bond yields and mortgage rates climbed. Mortgage rates are closely related to yields on long-term government bonds.

Mortgage rates and monthly payments are considerably higher than one year ago when rates hovered near record lows. Twelve months ago, the average 30-year fixed mortgage rate was 5.46 percent. At the time, the monthly payment on a $165,000 loan was $932.72. With the average rate now 6.15 percent, the monthly payment on the same $165,000 loan is $1,005.23. The $72.51 difference in monthly payments amounts to more than $26,000 over the loan term.

Bankrate’s national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in the top 10 markets.

The survey is complemented by Bankrate’s weekly forward-looking Rate Trend Index, in which a panel of mortgage experts predicts which way the rates are headed over the next 30 to 45 days. The overwhelming majority — 72 percent — expect rates to rise further in coming weeks. The remaining 28 percent are evenly split between saying rates will fall or remain unchanged in the next 30 to 45 days.

For a full analysis of this week’s move in mortgage rates, go to http://www.bankrate.com/mortgagerates