Mortgage rates hit 16-month high of 6.31%

WASHINGTON — Rates on 30-year mortgages climbed to the highest level in 16 months last week, marking the fourth straight week they have been above the 6 percent level.

Mortgage giant Freddie Mac reported Thursday that the nationwide average for 30-year, fixed-rate mortgages rose this week to 6.31 percent, up from 6.15 percent last week. It was the highest level since 30-year mortgages were at 6.32 percent in June 2004.

Rates on all other types of mortgages were also up this week, reflecting growing nervousness in financial markets about inflation pressures, triggered in part by the better-than-expected 3.8 percent growth rate the economy turned in during the July-September quarter.

“The news of an economy growing at such a strong pace gave financial markets a jolt and added to the impetus that caused mortgage rates to rise again this week,” said Frank Nothaft, Freddie Mac’s chief economist. An economy growing at a strong rate can trigger inflation pressures.

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 5.85 percent this week, up from 5.69 percent last week.

One-year adjustable rate mortgages rose to 5.09 percent. This was up from 4.91 percent last week and pushed the one-year ARM to its highest level in 3 1/2 years.