The average U.S. 30-year fixed-rate mortgage rose for the eighth time in nine weeks, reflecting the continued rise in long-term bond yields, Freddie Mac said. Other rates also climbed.
The 30-year rate for the week that ended Friday averaged 6.28 percent, up from 6.24 percent the week before, the No. 2 buyer of mortgages reported. The average rate on a 15-year mortgage rose to 5.60 percent from 5.58 percent, and the average one-year adjustable-rate mortgage climbed to 3.84 percent from 3.75 percent.
Long-term interest rates have been rising as signs of faster economic growth spark concern among bond investors over the possibility of inflation and increased demand for credit. Some economists said borrowing costs are still low enough to sustain demand for housing. The 30-year rate was 6.27 percent this time last year, Freddie Mac said.
"Even as mortgage rates continued to climb in August, builder confidence reached its highest level in 3 1/2 years," Frank Nothaft, chief economist at Freddie Mac, said in a statement. "This would indicate that 2003 will continue to be an outstanding year for the housing industry."
The Commerce Department said Tuesday that July housing starts unexpectedly surged to the highest in 17 years. The National Association of Home Builders said Monday that its index of builder sentiment jumped to 71 this month, from 65 in July.
Some economists said rising rates may start to cool the housing market later in the year as the backlog of orders for new homes declines and as higher rates make homes less affordable to first-time buyers.