Mortgage rates soared this week, with the average 30-year fixed mortgage rate jumping more than one-half percentage point to 6.74 percent according to a weekly survey by Bankrate.com. The jump of 54 basis points in the largest weekly increase in rates in over two decades, the financial web site said in a press statement. The average 15-year fixed rate mortgage climbed as well, to 6.40 percent, while the average jumbo 30-year fixed rate rose to 7.87 percent. Adjustable mortgage rates were sharply higher also, with the average 1-year ARM now 6.32 percent and the average 5/1 ARM skyrocketing to 6.61 percent. Mortgage rates posted the biggest one week increase since April 1987; in addition, yields on benchmark 10-year Treasury notes climbed as investors worried about the additional supply of government debt resulting from billions of dollars in various rescue packages. Mortgage rates move in relation to Treasury yields, but at a spread — or markup — over the risk-free government debt. The intensifying credit crunch and the government guarantees on bank debt drove up the spread between mortgage bonds and benchmark Treasuries. But since Treasury yields climbed from 3.5 percent to over 4 percent over the previous week, mortgage borrowers had two factors working against them. This sharp increase in mortgage rates over the past week has a direct impact on a homebuyer’s affordability, Bankrate said. At last week’s rate of 6.20 percent, a $200,000 loan carried a monthly payment of $1,224.94. This week, with the average rate at 6.74 percent, the monthly payment on a $200,000 loan is $1,295.87. For more information, visit http://www.bankrate.com.
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