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30-year mortgage rates up above 6 percent for first time in 7 weeks

WASHINGTON - Rates on 30-year mortgages rose to the highest level in seven weeks, breaking above the 6 percent level.

Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages averaged 6.04 percent this week, up from 5.72 percent last week.

That is the highest level since the first week of the year, when the 30-year mortgage stood at 6.07 percent. For the next six weeks, the rate fell below the 6 percent level as financial markets reacted to the sharp slowdown in economic growth and growing risks of a recession by pushing interest rates lower.

However, increased worries about inflation have pushed long-term rates higher in the past two weeks. However, one-year adjustable-rate mortgages are still about one-half percentage point lower than at the start of the year, reflecting the aggressive rate cuts engineered by the Federal Reserve in January in an effort to combat the economic slowdown.

'As the spread between long-term fixed-rates and adjustable-rates widens, it is possible we could see a slight increase in the popularity of adjustable-rate mortgages,' said Frank Nothaft, chief economist at Freddie Mac.

In other rate moves this week, rates on 15-year mortgages, a popular choice for refinancing, edged up to 5.64 percent, compared to 5.25 percent last week. Rates on five-year adjustable-rate mortgages rose to 5.37 percent, up from 5.19 percent last week.

Bucking the upward trend, rates on one-year ARMs dipped slightly to 4.98 percent, down from 5.03 percent last week.

The mortgage rates do not include add-on fees known as points. Thirty-year mortgages and one-year adjustable-rate mortgages both carried a nationwide average fee of 0.6 point. The 15-year mortgages and five-year adjustable-rate mortgages both had average fees of 0.5 point.

A year ago, 30-year mortgages stood at 6.22 percent while rates on 15-year mortgages were at 5.97 percent. Five-year adjustable-rate mortgages averaged 5.96 percent and one-year ARMs were at 5.49 percent this time a year ago.

A sustained rebound in home sales is not expected to occur until around the middle of the year after the number of homes for sale is reduced to more manageable levels.