30 Year Mortgage Rates: This week, interest rates on 30 year mortgages rose to the highest level in 3.5 years.

According to Freddie Mac, rates on 30 year, fixed-rate mortgages averaged 6.37% this week, up from a national average of 6.24%. The average for August, 2002, was 6.43%.

They attributed the rise in mortgage rates to the stronger than expected gains in the manufacturing and service industries, along with higher labor costs.

Investors have begun to worry that the raising of interest rates by the Federal Reserve to combat inflation, may go beyond one or two more rate hikes and may actually escalate rates three more times this year. Some economists believe 30 year mortgage rates could reach up to 7% by the end of the year.

The rising rates have impacted the housing market, with sales declining in January for both new and existing homes. But some do not expect this to upset the economy as it had done in 2000.

Rates rose sharply for all types of mortgage loans this week: Rates on 15 year, fixed-rate mortgages averaged 6%, up from 5.89% last week and the highest level for 15-year mortgages since they averaged 6.03% the week of July 5, 2002.

One year adjustable rate mortgages rose to 5.45%, up from 5.34% last week and the highest level for one-year ARMs since they averaged 5.58% the week of Sept. 21, 2001.

Rates on five year hybrid adjustable rate mortgages rose to 6.03%, the first time this mortgage has been above 6% since Freddie Mac began tracking it.

The mortgages rates do not include fees (points). The 30 year and 15 year mortgages had a national average fee of 0.6 point this week. One year adjustable rate mortgages had an average fee of 0.8 point, and the five year ARM had a 0.7 point average.

Looking back one year ago, 30 year mortgages averaged 5.85%, 15 year mortgages were at 5.38%, one year adjustable-rate mortgages were at 4.24%, and five year hybrid adjustable rate mortgages averaged 5.22%.