The mortgage-refinancing juggernaut hit a major speed bump last week when interest rates unexpectedly turned higher.

According to Keith T. Gumbinger, vice president at HSH Associates, which tracks mortgage trends, "thousands of applicants in the last few weeks have now seen their chance to refinance delayed at best, if not completely blown away."

On Friday the average rate on a 30-year fixed-rate mortgage was 7.04%, 46 basis points higher than three days earlier, HSH said. The weekly average was 6.70% last week, up 2 basis points.

Mr. Gumbinger attributed the increase to selling of Treasury bonds, which caused their yields to increase. Treasury yields are used as a benchmark for mortgage rates. Mr. Gumbinger also noted significant unloading of mortgage-backed securities, which caused the spread between mortgages and Treasuries to widen.

He predicted this week's average mortgage rate will be around 6.95%.

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