Mortgage rates climb again on inflation concerns

WASHINGTON — Interest rates on 30-year mortgages rose for a third straight week, hitting the highest level in more than four years as investors continued to express worries about inflation.

Freddie Mac, the mortgage company, reported Thursday that rates on 30-year, fixed-rate mortgages increased to a nationwide average of 6.78 percent this week, up from 6.71 percent last week.

It was the highest level for 30-year mortgages since they averaged 6.81 percent the week of May 24, 2002.

While the housing sector has enjoyed five boom years powered by the lowest mortgage rates in four decades, housing sales are expected to decline by 7 percent or more this year as higher mortgage rates make home ownership more costly.

“Financial markets continue to expect more rate hikes by the Fed over the next six months, which has added upward pressure on mortgage rates,” said Frank Nothaft, Freddie Mac’s chief economist.

“With higher interest rates, the housing market has begun a gradual and orderly reversion towards historical norms,” Nothaft said. “New construction, home sales and house price appreciation have all been slowing over the past few months.”

A variety of mortgages experienced rate increases this week, according to the Freddie Mac survey. Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing, increased to 6.43 percent, up from 6.36 percent last week.

Rates on one-year adjustable rate mortgages rose to 5.82 percent, up from 5.75 percent last week and the highest level in more than five years.

Rates on five-year adjustable-rate mortgages climbed to 6.39 percent, up from 6.32 percent last week.