Mortgage rates erase Fed's handiwork

NEW YORK (Reuters) - Mortgage rates leaped with bond yields in the past week to the highest since November, erasing strides made by a massive government program to help revive U.S. housing.

In late November, the government announced Federal Reserve programs to buy enormous amounts of mortgage-related debt to reduce loan rates and stabilize the hardest-hit housing market since the Great Depression.

The programs were later deepened, putting the Fed on track to absorb up to $1.45 trillion in mortgage bonds and agency notes as well as up to $300 billion in Treasury securities.

Average 30-year fixed mortgages jumped 0.30 point to 5.59 percent, the highest since the week ended November 26, Freddie Mac said on Thursday.

That is more than a 7/8 point spike just since April, when the rate touched down to 4.78 percent -- the lowest since Freddie Mac began tracking it weekly in 1971.

Bond yields are a peg for setting home loan rates.

After falling sharply, bond yields soared over the past few weeks on economic reports that were not as weak as expected. The promise of record Treasuries issuance to fund various federal rescue programs has also pressured yields higher.

Mortgage rates, in response, swung swiftly from record lows back to rates seen prior to the federal interventions.

Home purchase activity has been fairly stagnant during this period, based on data from the Mortgage Bankers Association.

Mortgage rates remain lower than a year ago, when the 30-year loan averaged 6.32 percent.

But refinancing, which is highly sensitive to rate shifts, has fallen to the lowest levels since November.

Lenders charged an average of 0.7 percent on loans in the past week, unchanged from the prior week.

(Reporting by Lynn Adler; Editing by Diane Craft)