Mortgage rates at 9-month high

Rates on 30-year fixed mortgages have surged a tenth of a percentage point to a 9-month high on growing concerns about inflation, mortgage backer Freddie Mac said Thursday.
Freddie Mac (FRE, Fortune 500) said 30-year fixed-rate mortgages averaged 6.42% with an average of 0.7 point in the week ending Thursday, up from 6.32% last week. Last year at this time, the 30-year loan averaged 6.69%.
The last time the 30-year fixed rate mortgage was higher was the week ended Sept. 6, when it averaged 6.46%, according to Eileen B. Fitzpatrick, a Freddie Mac spokeswoman. "Fixed-rate mortgage rates continued to climb this week to the highest point in nearly nine months following the release of May's consumer and producer price indexes, both of which showed stronger levels of inflation," said Frank Nothaft, Freddie Mac vice president and chief economist, in a statement.
"Additionally, consumer prices rose 0.6% last month, the most since November 2007, and traders began to fully price in a Federal Reserve rate hike by the end of September, based on the federal funds futures market," he added.
For rates to stop climbing and start to ease, "we would have to see some settling of inflation pressures - notably a leveling, if not outright decline, of food and energy costs," said Keith Gumbinger, vice president of HSHAssociates.com, an online publisher of consumer loan information.
While inflationary pressure is pushing interest rates higher, it's also pushing buyers out of the market and home prices down, said Gumbinger.
"Interest rates were about this level - give or take - last year, but home prices were considerably higher," he said. "Rates may not be lower, but your home prices may be lower."
The 15-year fixed-rate mortgage this week averaged 6.02% with an average 0.7 point, up from last week when it averaged 5.93%. A year ago at this time, the 15-year FRM averaged 6.37%. The last time the 15-year FRM was higher was the week ending Oct. 18, when it averaged 6.08%.
Five-year adjustable-rate mortgages (ARMs) averaged 5.89% this week, with an average 0.6 point, up from last week when it averaged 5.70%. A year ago, the 5-year ARM averaged 6.31%. This is the highest the 5-year ARM has been since the week ending Dec. 27, when it averaged 5.90%.
One-year Treasury-indexed ARMs averaged 5.19% this week with an average 0.6 point, up from last week when it was 5.09%. At this time last year, the 1-year ARM averaged 5.66%.
"The housing market still struggles. New construction of single family (1-unit) homes fell in May to the weakest pace since January 1991 and April's starts had a downward revision," added Nothaft.