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NEW YORK, Feb 8 (Reuters) - U.S. 30-year mortgage rates jumped to their highest levels in more than 13 months as U.S. bond yields rose on concerns that hints of rising inflation would make the Federal Reserve raise interest rates faster, Freddie Mac said on Thursday.
The borrowing cost on 30-year mortgages, the most widely held type of U.S. home loan, averaged 4.32 percent in the week ended on Feb. 8, matching the level last seen in the week of Dec. 29, 2016. Last month, 30-year home loan rates had averaged 4.22 percent, the mortgage finance agency said.
They have risen 0.33 percentage point since the beginning of 2018 but only 0.15 point from a year-ago level.
Benchmark 10-year Treasury yield hit a four-year peak on Monday before a stock market meltdown that spurred a safen-haven rally in the bond market, sending yields sharply lower.
Financial markets has stabilized, rekindling a sell-off in Treasuries, as traders have been making room for this week's government debt supply. A tentative two-year budget deal in the Senate on Wednesday has stoked worries about more government borrowing to finance spending and last year's tax cuts, analysts said.
Early on Thursday, U.S. bond yields followed a rise with their British counterparts after the Bank of England signaled it may increase interest rates sooner than previously thought as it upgraded its view on the U.K. economy due to an improving global backdrop.
So far the surge in mortgage rates has not hurt mortgage demand and the housing market, Freddie Mac's deputy chief economist Len Keifer said.
"Will higher rates break housing market momentum? It's too early to tell for sure, but initial readings indicate housing markets are sustaining their momentum so far," Kiefer said in a statement.
The volume of mortgage applications to buy a home were unchanged last week from the prior week and were 8 percent higher from a year ago, the Mortgage Bankers Association said on Wednesday.
Reporting by Richard Leong; Editing by Chizu Nomiyama and Tom Brown