30-Year Loan Hits 2-Year High of 8.77%
Mortgage rates soared to the highest levels in more than two years this week as a weak bond market forced interest rates higher, the Federal Home Loan Mortgage Corp. reported.</br></br>8.77	percent in the week ending on Thursday, from 8.53 percent last week. The rate on the most popular home loan was the highest since the week ending May 8, 1992, when it reached 8.75 percent.</br></br>Strong economic growth, inflation fears and rumors that the Federal Reserve will soon raise interest rates triggered a sell-off in bonds as investors demanded higher yields, said Frank Nothaft, deputy chief economist for Freddie Mac.</br></br>Thus, borrowers were forced to pay higher rates on mortgages, which are sold as mortgage-backed securities in the bond market.</br></br>The average rate on 15-year fixed-rate mortgages rose to 8.25 percent from 8.03 percent. It was the highest rate since 8.26 percent ih the week ending May 15,1992.