Mortgage rates spike upward in latest week

WASHINGTON (Reuters) - U.S. 30- and 15-year mortgage rates spiked upward in the latest week amid fears of greater housing market weakness and expectations of higher interest rates going forward, according to a survey released on Thursday by home funding company Freddie Mac.

U.S. 30-year mortgage rates rose to an average of 6.63 percent from 6.26 percent a week ago, while 15-year mortgages averaged 6.18 percent, up sharply from 5.78 percent a week ago.

One-year adjustable rate mortgages, or ARMs, averaged 5.49 percent, also up from 5.10 percent last week.

Freddie Mac said the "5/1" ARM, set at a fixed rate for five years and adjustable each following year, averaged 6.16 percent compared with 5.80 percent a week earlier.

A year ago, 30-year mortgage rates averaged 6.69 percent, 15-year mortgages 6.37 percent and the one-year ARM 5.69 percent. The 5/1 ARM averaged 6.30 percent.

"Market concerns about rising inflation, further weakness in the housing market and greater probability that the Federal Reserve will raise short-term rates this year all combined to push mortgage rates higher this week," Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement.

"Some of the key drivers to these concerns were consumer prices jumping 1.1 percent (annualized) in June ... coupled with consumer prices growing at a 5.0 percent clip (on a year-over-year basis)," he noted.

Nothaft also pointed to the Office of Federal Housing Enterprise Oversight's home price index, which said home prices fell 4.8 percent in the 12 months ending in May 2008.

Earlier on Thursday, the National Association of Realtors said U.S. June existing home sales fell 2.6 percent to an annualized rate of 4.86 million units. On Friday, the Commerce Department will release U.S. new home sales for June.

Lenders charged an average of 0.6 percent in fees and points on 30- and 15-year mortgages, both unchanged from last week.

They charged 0.5 percent on the one-year ARM, down from 0.6 percent last week, and 0.7 percent on the 5/1 ARM, up from 0.6 percent.

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 Melissa Bland; Editing by Jonathan Oatis)