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WASHINGTON – Oct. 17, 2008 – Rates on 30-year mortgages jumped to the highest level in eight weeks, squeezing some potential homebuyers out of the market, and reflecting how nervous lenders remain despite the massive global intervention in the credit markets.

Mortgage giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages averaged 6.46% this week, up from 5.94% last week. It marked the third increase out of the past four weeks and pushed rates to the highest level since Aug. 21.

In plain dollars and cents, last week’s increase means a homebuyer would spend about $55 more a month to buy the U.S. median-priced home of $203,100 with a 20% down payment.

And given falling home prices in large swaths of the country, higher interest rates might just be one more reason for buyers to hold off.

Analysts attributed the increase to the turbulent financial markets, which have been roiled by huge swings in recent weeks reflecting a severe credit crisis.

As the stock market had one of its worst weeks ever, investors fled to the safety of Treasury securities backed by the U.S. government. That drove bond yields down because investors were willing to make almost nothing on their money just to keep it secure. Mortgage rates dropped, too.

Last week, bond yields that influence mortgage rates moved higher, in part because the heavy demand for the safety of bonds eased.

“People aren’t quite as scared as they first were about the markets and that has meant Treasury yields have risen a bit,” Wyss said.

Rates on 30-year mortgages hit a high for the year of 6.63% in late July and then dropped below to a seven-month low of 5.78% the week of Sept. 18.

According to the Freddie Mac survey, rates on all types of mortgages were higher this week.

Rates on 15-year fixed-rate mortgages, which are popular with people who are refinancing, rose to 6.14%, compared to 5.63% last week.

Rates on five-year adjustable-rate mortgages also rose to 6.14%, up from 5.90% last week. Rates on one-year adjustable-rate mortgages edged up slightly to 5.16%, compared to 5.15% last week.

The mortgage rates do not include add-on fees known as points. The nationwide fee for 30-year, 15-year, five-year and one-year mortgages all averaged 0.6 point.

A year ago, the nationwide average rate on 30-year mortgages stood at 6.40%, 15-year mortgage rates averaged 6.08%, five-year adjustable-rate mortgages were at 6.11%, and one-year adjustable-rate mortgages stood at 5.76%.

Source: FAR