Interest rates on new one-year, adjustable-rate mortgages surged to the highest level in nine months this week while fixed-rate mortgages jumped almost to the high point for the year, according to a nationwide survey released Friday. The Federal Home Loan Mortgage Corp., a government-chartered company owned by savings institutions and known as Freddie Mac, said the one-year, adjustable-rate mortgages this week averaged 8.00 percent, up from 7.90 percent the week before. It was the highest since rates averaged 8.11 percent the week ending Nov. 6. Thirty-year, fixed-rate mortgages jumped to 10.57 percent from 10.44 percent the previous week. That was just slightly below the high for the year so far _ 10.58 percent _ the average for the weeks ending May 27 and June 3. The jump in rates this week followed a move Tuesday by the Federal Reserve Board to push up interest rates to slow the economy and fight inflation. Economists predict a wide range of interest rates, including mortgage rates, will increase further this year. Fixed-rate mortgages hit a peak just before the October stock market crash of 11.58 percent. As the Fed pumped money into the economy to avoid a recession, the average dropped to 9.84 percent in early February. The increase since then means homebuyers taking out $100,000 mortgages now face about $670 more in annual costs than they would have on a fixed-rate mortgage taken out six months ago. Thomas M. Holloway, senior economist for the Mortgage Bankers Association of America, said fixed-rate mortgages likely will rise another three-quarters of a percentage point by the end of the year. ``I think it's going to slow down the housing sector, but I don't think this is the death of the industry,'' he said. Fixed-rate mortgages have fluctuated widely over the past several years, depending on financial market assessment of inflation dangers. But the one-year rate has stayed relatively low, serving as an alternative for home buyers when fixed rates jump. However, adjustable rates now are also moving higher, reflecting Federal Reserve tightening, which has a more immediate effect on short-term rates than on long-term rates. In a separate report, the Federal Home Loan Bank Board, which regulates federally insured savings institutions, said fixed-rate mortgages declined slightly from 10.78 percent in early June to 10.73 percent in early July. The dip followed three consecutive monthly increases. Unlike Freddie Mac averages, the bank board numbers include add-on fees known as ``points.'' Also, the bank board averages do no reflect changes over the past month. The bank board said rates, including points, for the most popular type of one-year, adjustable-rate mortgages _ those with caps on how high the rates can increase _ rose for the third month in a row from 8.80 percent in early June to 8.86 percent in early July.
