Mortgage Rates Keep Rising

McLEAN, Va. - (06/23/06) -- Long-term mortgage rates climbed totheir highest level this week in more than four years, as worriesabout inflation led investors to believe that more Fed rate hikesare on the way, Freddie Mac said Thursday. The average for thebenchmark 30-year, fixed-rate loan increased to 6.71% this week,from 6.63% last week; while the average for the 15-year, fixed-ratemortgage jumped to 6.36% from 6.25%. Both were the highest sinceMay 2002. ARM rates also continued to move upwards, with theone-year ARM average rising to 5.75%, from 5.66% last week; and thefive-year ARM average climbing to 6.32%, from 6.23%. "Financialmarkets believe that the current rate of inflation is above theFed's comfort zone, which will lead to more rate hikes in the nearfuture," said Frank Nothaft, chief economist for Freddie Mac.Investors' expectations that the Federal Reserve will raiseshort-term rates later this month and possibly further later thisyear "caused mortgage rates to jump higher this week," Nothaftadded.