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Mortgage rates reach highest level since January

WASHINGTON — Mortgage rates rose sharply for the second week in a row, with benchmark 30-year mortgage rates at their highest level since late January.

The average interest rate on a fixed-rate 30-year mortgage was 5.91 percent for the week ending March 28, the mortgage company Freddie Mac reported Thursday in its weekly nationwide survey.

Last week, rates on 30-year mortgages were 5.79 percent, after dipping to a record low rate of 5.61 percent the week before. That rate was the lowest since Freddie Mac began tracking 30-year mortgages in 1971. Records that reach back earlier than Freddie Mac's indicate that the rate is the lowest since the early 1960s.

The recent rise in rates reflected a hope in financial markets that the war in Iraq would be swift, economists said. That caused investors to shift money into stocks from bonds. As a result, bond prices declined and interest rates on bonds rose. But financial markets have been gyrating between hopes of a quick victory and fears of a prolonged war.

"Following the onset of the Iraq conflict, financial markets seem to have an upward bias for mortgage rates," said Frank Nothaft, Freddie Mac's chief economist. "Specifically, the market expects the conflict to end relatively soon. However, that's not to say that uncertainty has diminished in any large way, but it has shifted to a different set of unknowns."

For 15-year fixed-rate mortgages, a popular option for refinancing, rates rose this week to 5.21 percent, compared with 5.11 percent last week.

On one-year adjustable rate mortgages, rates were at 3.84 percent, compared with 3.75 percent last week.

Rates remain at a level where home-buying is still affordable, economists said.

A year ago, rates on 30-year mortgages averaged 7.18 percent, 15-year mortgages were 6.60 percent and one-year adjustable mortgages stood at 5.11 percent.