Mortgage Rates Jump Amid Inflation Fears

The average rate on 30-year fixed-rate mortgages jumped this week to 7.19%, the highest level in nearly four months, Freddie Mac said. Rates also rose on 15-year mortgages and one-year adjustable-rate mortgages. The increase in the 30-year rate, from 7.09%, brought the average to the highest level since the week ended Nov. 13. Seven weeks ago, the rate sank to a four-year low of 6.89% as Asian financial turmoil encouraged investment in the United States. However, in the last two weeks, investors have become concerned that the Asian crisis won’t dampen U.S. growth as much as thought. That implies inflation pressures could worsen, which in turn reduces the chance the Federal Reserve Board will cut short-term interest rates. Fifteen-year mortgages, a popular option for refinancing, averaged 6.80% this week, a four-month high and up from 6.69% last week. On one-year adjustable-rate mortgages, lenders were asking an average initial rate of 5.70%, up from 5.65% and the highest in nine months. The rates do not include add-on fees known as points.