Mortgage rates rise, topping 6%

(CNNMoney.com) -- Rates on 30-year mortgages were pushed up this week above 6 percent amid growing concerns about inflation, mortgage backer Freddie Mac said Thursday.

Freddie Mac said 30-year fixed-rate mortgages averaged 6.08% with an average of 0.6 points, up from 5.98% last week. Last year at this time, the 30-year loan averaged 6.42%.

"Mortgage rates drifted up this week over market concerns that the Federal Reserve Board may raise short-term rates later this year," said Frank Nothaft, Freddie Mac vice president and chief economist, in a statement.

"Indeed," Nothaft added, "market inflation expectations increased over the last few weeks and the federal funds futures market now has a 25 basis point rate hike priced in by the end of the year."

Fanning the concerns about inflation are skyrocketing food and energy prices. On Thursday the average price for a gallon of gas passed $4 per gallon in 11 states, while oil prices rebounded to about $130 a barrel as supplies fell sharply. Also on Thursday, a report from the Labor Department showed that new applications for unemployment insurance rose last week.

And the housing market continues to deteriorate. A report on Tuesday showed that US home prices fell 14.1% in the first quarter, the sharpest decline in 20 years. Additionally, a Census Bureau report out this week found that new home sales remain near a 17-year low.

Rates on five-year adjustable-rate mortgages (ARMs) averaged 5.62 percent this week, with an average 0.5 point, up slightly from last week when it averaged 5.61 percent. A year ago, the 5-year ARM averaged 6.19 percent.

The rate for one-year ARMs averaged 5.22 percent this week with an average 0.6 point, down slightly from last week when it was 5.24 percent. At this time last year, the 1-year ARM averaged 5.57 percent.