The average 30-year fixed-rate mortgage jumped 5 basis points from last week to 6.67% — the highest its been since the week ending June 13, 2002, according to Freddie Mac’s latest Primary Mortgage Market Survey. At this time a year ago, the 30-year average 5.62%.

The 15-year averaged 6.26%, or 3 BPS higher than a week earlier, Freddie said.

In late trading, the 10-year Treasury — a benchmark for fixed mortgage rates — had a yield of 5.10%, down 0.02% for the day, while the price was up at 100.16.

Up 5 BPS from a week ago, the 5-year Treasury-indexed hybrid adjustable-rate mortgage reportedly averaged 6.26%.

The highest week-to-week climb — 7 BPS to 5.68% — was in the average for 1-year Treasury-indexed ARMs, Freddie reported, adding that this is the highest level it has been at since August 2001. The 1-year T-bill itself, at 5.07% Tuesday, climbed 10 BPS from seven days prior.

Rates moved up again this week due to Wednesday’s release of the Federal Open Market Committee May 10 meeting minutes, as the group’s expressed concern over inflationary pressures “caused the bond market yields to rise, and brought about market speculation that the Fed may hike rates sooner than had been expected,” Freddie Mac Chief Economist Frank Nothaft commented.

While the committee ended up raising the federal funds rate by 25 basis points to 5%, the minutes statement showed the group “discussed policy approaches ranging from leaving the stance of policy unchanged at this meeting to increasing the federal funds rate 50 basis points.”

“Given the risks to growth and inflation, Committee members were uncertain about how much, if any, further tightening would be needed after [the May 10] action,” the minutes statement read.

The committee expressed concern on the “upside risks to inflation,” but said that the apparent rise in inflation expectations, “while worrisome, was relatively small” and “could well reverse before long,” thereby the group characterized inflation expectations again as “contained.”

At the same time, members saw “downside risks to economic activity” because “the cumulative effect of past monetary policy actions and the recent rise in longer-term interest rates on housing activity and prices could turn out to be larger than expected.”

“Still, it seemed most likely that, with modest further policy action, including a 25 basis point firming today, growth in activity would moderate gradually over coming quarters, pressures on resources would remain limited, and core inflation would stay close to levels experienced over the past year,” the members concluded.

Nonetheless, Freddie’s Nothaft reiterated mortgage rates will rise gradually over the year.

Over the next 35 to 45 days, half of the 100 mortgage “experts” surveyed by Bankrate.com expect rates to rise, 34% see them remaining relatively unchanged and the rest forecast a downturn.

During the next quarter, the 30-year could average anywhere from 6.6% to 6.8%, according to the latest forecasts by Freddie, Fannie Mae and the Mortgage Bankers Association, with the last of these groups predicting the higher figure.

As for 1003 activity, loan originators completed 2% fewer mortgage applications during the week ending May 25, mainly due to the 5% decline in refinance requests, which apparently pushed down the refinance share of total mortgage activity from the previous week to below 35%, the Mortgage Bankers Association reported.

The ARM share of mortgage applications edged up from the previous week to 31%, MBA said.