How soon before we have 7 percent mortgage rates. Currently, the 30 year fixed is at 6.74 percent. Not long.....

CHICAGO (MarketWatch) -- U.S. mortgage rates jumped this week as a sell-off in the Treasury market pushed benchmark interest rates up sharply. Freddie Mac in its weekly survey Thursday said the national average on the 30-year fixed-rate mortgage hit 6.74%, up from 6.53% a week ago and the highest level since July 2006.

"Mortgage rates moved sharply upward this week, with rates on 30-year fixed-rate mortgages jumping more than 20 basis points, the largest upward movement in over three years," said Frank Nothaft, "These moves parallel rising yields on Treasury securities, as concerns about inflation pressures and continuing strength of consumer and business spending have dimmed hopes for an interest rate cut," he said.

Three other loans tracked in the Freddie Mac survey also hit 11-month highs. The 15-year fixed-rate loan, a popular refinancing choice, hit 6.43%, up from 6.22%, its highest level in 11 months. A year ago the 15-year averaged 6.25%.

Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 6.37% versus 6.24% a week ago. A year ago the loan averaged 6.23%. One-year Treasury-indexed ARMs averaged 5.75%, up from 5.65% and above its year-ago level of 5.66%.

The two fixed-rate loans required the payment of an average 0.4 point to achieve the interest rate; the hybrid needed 0.5 point and the ARM 0.7 point. A point is 1% of the loan amount, charged as prepaid interest.

The spike in mortgage rates comes at a bad time for the housing industry, as home builders struggle with excess inventory and sales of existing homes slump. Home prices are also falling in many markets. And the Mortgage Bankers Association Thursday said new foreclosures hit a record in the first quarter.