U.S. 30-year fixed rate mortgages rose to their highest level in over seven months as signs of a rebounding economy led to inflation fears and speculation that the Federal Reserve might raise interest rates in the near future, Freddie Mac said on Thursday.
Freddie Mac said U.S. 30-year mortgage rates averaged 6.34 percent in the latest week, up from 6.12 percent a week ago and the highest since they averaged 6.44 percent in the Sept. 5, 2003, week. It was also the third straight week that 30-year mortgage rates were over 6 percent.
Fifteen-year mortgages rose to an average of 5.72 percent from 5.47 percent the prior week, also the highest since the Sept. 5, 2003, week when they averaged 5.77 percent.
One-year adjustable rate mortgages inched upward to an average of 3.90 percent from 3.76 percent last week.
A year ago, 30-year mortgage rates averaged 5.45 percent, 15-year mortgages 4.84 percent and the ARM 3.67 percent.
"Last month's huge surge in employment figures reaffirmed market expectations that the Fed will move sooner now rather than later," Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement.
"This put pressure on the bond market, and as yields grew, so did mortgage rates," he said.
Last week the Labor Department reported a 288,000 jump in U.S. April nonfarm payrolls following an upwardly revised 337,000 surge in March.
On Friday Labor will issue its April Consumer Price Index. "With that, the focus of concern shifts away from the lack of job growth and towards inflation as a deciding factor for the Fed in determining the timing of future action," Nothaft said.
Earlier on Thursday Labor said U.S. April producer prices rose 0.7 percent, the largest increase since March of last year.
Freddie Mac said lenders charged an average of 0.7 percent in fees and points on 30- and 15-year mortgages as well as the ARM, all unchanged from last week.
Freddie Mac is a mortgage finance company chartered by Congress that buys mortgages from lenders and packages them into securities for investors or holds them in its own portfolio.