US 30-year mortgage rate jumped on Wednesday-Zillow

NEW YORK, June 10 (Reuters) - Interest rates on U.S. 30-year fixed-rate mortgages rose to 5.74 percent late Wednesday after hovering around 5.68 percent a day earlier, according to the Zillow Mortgage Rate Monitor.

Real estate Website Zillow.com, which compiles the information, said that a week earlier the rate was around 5.40 percent.

The higher rates reflect a rise in yields on U.S. government bonds, which serve as a benchmark for the mortgage market.

The rate is also sharply higher than both the end of May, when it was around 5.00 percent, and from the beginning of the year when it was also around 5.00 percent, Zillow said.

The rise in rates should hurt home purchase activity, and it has already collapsed home loan refinancing.

Bob Walters, chief economist at Quicken Loans, an online mortgage lender in Livonia, Michigan, said mortgage applications have slowed as rates have steadily pushed higher.

"Many consumers have stepped to the sidelines hoping rates will drop again," he said.

"That is certainly possible, but it's clear that the government's desire to push mortgage rates lower is being offset by the bond trader's concerns over the huge amount of Treasury debt now flooding the market," he said.

The battered U.S. housing market, which is in the midst of its worst downturn since the Great Depression, is both the source of and a major casualty of the credit crisis.

A setback for the market could prolong the wait for a turnaround for the U.S. economy.