Interest Rates On Mortgages Hit 7.9 Percent

Thirty-year mortgage rates rose to 7.94 percent last week, the highest national average since early May, as U.S. bond yields climbed, according to the Federal Home Loan Mortgage Corp.

The average 30-year fixed mortgage rate at lenders around the country is up 0.53 percentage from this year’s low, set a month ago and up from 7.8 percent last week. Mortgage rates haven’t been this high since the week ended May 5.

The rise in mortgage rates was generated by a jump in U.S. bond yields, which rose as bond investors and traders fretted that an economic rebound late this year will spur inflation. Inflation erodes the value of bonds’ fixed income payments.

Even so, some economists said rates may be set to fall this week.

“All the economic news indicates a rather sluggish economy, so there’s a chance we may even see rates go downward next week,” said Robert Van Order, chief economist at Freddie Mac.

This week, the yield on the benchmark 10-year Treasury note, a proxy for mortgage rates, rose to 6.57 percent Friday from 6.50 percent a week ago.