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Mortgage Rates Swiftly Soar

Prospective homebuyers may have felt like they missed the boat, now that mortgage interest rates have risen to the highest levels in more than two years.

But CBS News Marketwatch Correspondent Betsy Karetnick gives consumers key tips in getting the most out of the hot economy and strong job market.

Mortgage rates are the highest theyÂ've been since April 1997. Freddie Mac announced the average 30-year fixed-rate is up to 8.15 percent this week, up from 7.89 percent last week. Karetnick says this may be fueled by speculation that the Federal Reserve will again raise rates.

"What happened is something called inflation," she says. "Not that we have inflation, but there is a big fear....We have a strong job market. There is pressure on wages moving upward."

"The Federal Reserve, which sets monetary policy, is worried about some of these elements. They raised rates back in June.... There is another fear they will raise interest rates again,"
Karetnick adds.

Karetnick says the recent rate hike is not as significant monetarily as it is psychologically. Currently over eight percent, double-digit returns are right around the corner. "Ten percent is a big, scary number," she says.

But Karetnick offers some heartening words of advice. Aside from shortening the length of the loan, she says, consumers should also consider buying points from the bank.

"One thing to consider when you see a 30-year fixed rate mortgage going higher is getting another type of loan," she explains.

"That's not the only [option]; it's just the one that is most attractive. You can get an adjustable rate mortgage with other mortgage rates, with interest rates moving. Also, you can get a hybrid. That is a combination of fixed rate for a certain period of time...and then it goes to an adjustable," Karetnick says.

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