Mortgage rates hit highest level in six months. ‘Demand is likely to weaken.’

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The numbers: Mortgage rates inched toward 7% as strength in the U.S. economy prompted investors to expect another rate hike by the Federal Reserve.

The 30-year fixed-rate mortgage averaged 6.79% as of June 1, according to data released by Freddie Mac on Thursday. 

That was up 22 basis points from the previous week — one basis point is equal to one hundredth of a percentage point. 

Last week, the 30-year was at 6.57%. Last year, the 30-year was averaging at 5.09%.

The average rate on the 15-year mortgage increased to 6.18% from 5.97% last week. The 15-year was at 4.32% a year ago.

Freddie Mac’s weekly report on mortgage rates is based on thousands of applications received from lenders across the country that are submitted to Freddie Mac when a borrower applies for a mortgage. 

Separate data by Mortgage News Daily said that the 30-year fixed-rate mortgage was averaging at 6.88% as of Thursday afternoon.

What Freddie Mac said: “Mortgage rates jumped this week, as a buoyant economy has prompted the market to price-in the likelihood of another Federal Reserve rate hike,” Sam Khater, chief economist at Freddie Mac, said in a statement.

“Although there has been a steady flow of purchase demand around rates in the low to mid six percent range, that demand is likely to weaken as rates approach seven percent,” he added.

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