Mortgage Rates Surge

Mortgage rates have surged over the past week, making the purchase of a new home even less attractive in the already weak housing market.

Government-backed mortgage giant Freddie Mac(FRE Quote) reported Thursday that fixed-rate mortgages have reached their highest level in nearly a year.

The rise in mortgage rates comes as banks continued to fear that the cash-strapped lender and its counterpart, Fannie Mae(FNM Quote), will slow their purchase of loans. Freddie said in an SEC filing last week that it may even sell some mortgage securities to shore up capital levels.

Weaker demand leads to higher interest rates, and all types of mortgages have been driven upward over the past week. Certain rates move in tandem with Treasury notes, which have also been pushed higher over the past week. The yield on the 10-year Treasury bond was at 4.148% by noon on Thursday, up from 4.038% a week earlier. ...