Rates jump on 30-year mortgages

WASHINGTON - Rates on 30-year mortgages kept surging this week, rising to the highest level in nearly nine months, reflecting more concerns about what the Federal Reserve will do to combat a growing inflation threat.

Freddie Mac, the mortgage company, reported yesterday that 30-year fixed-rate mortgages averaged 6.42 percent this week. That was up sharply from 6.32 percent last week.

It was the highest level for 30-year mortgages since they averaged 6.42 percent for the week of Sept. 27 and marked the fourth straight week above 6 percent.

Frank Nothaft, chief economist at Freddie Mac, said the increased concerns about inflation were fueled by reports in the past week showing both consumer prices and wholesale prices rose by significant amounts in May. This spurred further increases in the futures market where investors place bets on future Fed actions. That market is pointing to a Fed rate increase in September.

From last September through April, the central bank aggressively cut rates to try to keep the economy from falling into a recession, but now the Fed's focus has shifted to worries about inflation.