U.S. 30-year mortgage rates shoot up in latest week

WASHINGTON, Oct 16 (Reuters) - U.S. 30-year mortgage rates jumped in the latest week, according to a survey released on Thursday by home funding company Freddie Mac.

U.S. 30-year mortgage rates climbed to an eight-week high, averaging 6.46 percent from 5.94 percent last week. The 52 basis point increase is the largest one week rise since the week ending April 17, 1987, when rates rose 84 basis points.

U.S. 15-year mortgage rates also rose sharply to an average of 6.14 percent from 5.63 percent last week.

One-year adjustable rate mortgages, or ARMs, inched upward in the week to an average of 5.16 percent from 5.15 percent last week.

Freddie Mac said the "5/1" ARM, set at a fixed rate for five years and adjustable each following year, also rose to an average of 6.14 percent from 5.90 percent a week earlier.

A year ago, 30-year mortgage rates averaged 6.40 percent, 15-year mortgages 6.08 percent and the one-year ARM 5.76 percent. The 5/1 ARM averaged 6.11 percent.

"ARM rates, which tend to be based on shorter-term benchmarks, showed smaller gains in part due to the Federal Reserve's October 8 inter-meeting rate cut in the overnight lending rate," said Frank Nothaft, Freddie Mac vice president and chief economist, in a statement.

"Recent economic reports suggest the economy is still slowing," Nothaft added. "The Federal Reserve indicated that economic activity weakened in September across all 12 Federal Reserve Districts and that several Districts also noted that their contacts had become more pessimistic about the economic outlook."

Earlier in the week, the Commerce Department reported that retail sales fell 1.2 percent in September, the biggest monthly decline in more than three years.

Lenders charged an average of 0.6 percent in fees and points on 30- and 15-year mortgages, as well as on the one-year ARM and 5/1 ARM, all unchanged from last week.

Freddie Mac is a mortgage finance company chartered by Congress that buys mortgages from lenders and packages them into securities to sell to investors or to hold in its own portfolio.

(Reporting by Jasmin Melvin, Editing by Chizu Nomiyama)