Who's Hurt by Mortgage-Rate Jump

Inflation concerns may have made mortgages less affordable in the past week or two.

The interest rate for 30-year fixed rate mortgages surged to 6.32% with 0.7 points last week (up from 6.09% and 0.6 points). This represents the highest rate for 30-year fixed loans since October, according to the latest Freddie Mac(FRE Quote - Cramer on FRE - Stock Picks) Primary Mortgage Market Survey.

In his weekly commentary, Frank Nothaft, Freddie Mac's chief economist, attributed the surge in rates to inflation concerns expressed by a number of Federal Reserve officials, most notably Chairman Ben Bernanke and Vice Chairman Donald Kohn.

Nothaft also cited changes in the futures market that serves as a predictor of rate changes: "The federal funds futures now suggest the Fed will increase the overnight lending rate by 50-75 basis points by next January." A basis point is 1/100th of a percentage point.

The futures market still anticipates that the Fed will hold rates steady at its June meeting, but there was an almost 30-percentage-point increase in the chance that the Fed might raise rates at its August meeting. (The futures market still predicts that rates will remain steady, but that probability is now below 50%.)

If you're looking to take out a mortgage, higher rates mean higher monthly payments on adjustable rate mortgages and on new mortgage applications that haven't yet locked in rates.

Say you want to borrow $200,000. If you had locked in your rate last week, your monthly mortgage payment would be $1,210.70. At this week's rates, however, that payment is now $1,240.55. That amounts to an extra $358.20 per year, and more than $10,750 in additional interest accrued over the life of the loan.

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