Today: 30-year mortgage rate takes a nearly unprecedented one-week jump to its highest point in two years as the real-estate market heats up. Also: Apple (AAPL) continues to decline even as Wall Street has third straight day of gains.

The lead: With housing market at multiyear highs, mortgage rate takes large leap

The average rate for a 30-year mortgage experienced its largest one-week increase in more than a quarter-century, as the housing market continues a booming turnaround from the crisis that precipitated the Great Recession.

Mortgage buyer Freddie Mac reported Thursday that the rate had increased from 3.9 percent to 4.46 percent in the past week, the highest rate recorded in more than two years. The rise in the mortgage rate is even more striking when comparing it to near-record-lows experienced less than two months ago -- in early May, the average rate was 3.35 percent. Bankrate.com reported that the 3.35 percent rate on a $200,000 mortgage would result in monthly payments of $881, while the 4.46 percent rate would cost a buyer $1,008 a month.


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The rise comes as the housing market roars back to life so quickly that some in the Bay Area have asked if the region has entered another housing bubble. Home prices in the Bay Area hit their highest average in five years in May, according to DataQuick, returning to levels last seen before the Great Recession had most of its effects on the market. That mirrors a national rise, with the Standard & Poor's/Case Schiller index tracking the highest annual gain in home prices since 2006 in April, as San Francisco joined three other large metro areas in increases of more than 20 percent.

The mortgage rate gain arrives in the wake of Federal Reserve chairman Ben Bernanke's announcement last week that the central bank could look to pull back on its $85 billion bond-purchasing program, which exists in part to help keep long-term interest rates low. If and when the Fed actually begins to taper its purchases, mortgage rates are likely to move higher, with the big question being: Will that affect the housing rebound?

The answer, according to economists, is not really, at least in the short term. While prices are likely to settle down, changes in demand are likely to be much smaller, which should maintain the status quo.

"While rising interest rates will reduce housing demand, rates would have to increase considerably more before the reduction in demand for home purchases would be substantial across the country," Freddie Mac Chief Economist Frank Nothaft wrote.

Zillow chief economist Stan Humphries agreed, but added that some areas will feel a change more than others.

"The national housing recovery is strong and sustainable, but pockets of volatility will emerge," he told The Associated Press. "Buyers expecting home values to continue rising at this pace indefinitely may be in for a shock."

In the Bay Area, experts said this month that the immediate effect could be beneficial for the average homebuyer: If higher interest rates force investors out of the mix, it would calm the bidding wars that have erupted on certain properties, frustrating those in the market.

"We'll see a little bit of a pullback and that will be helpful," Jenna Gray, a senior mortgage adviser at CMG Financial in San Ramon, told The Mercury News. "Buyers are discouraged with properties being sold way over asking. It'll be good for the market to have more buyers feeling confident their bids will be accepted."

In fact, the higher mortgage rates may be leading to a rush to complete some home purchases, which could lead to even more multiyear highs for sales: The Commerce Department reported Wednesday that the number of contracts signed for home purchases in May hit a six-year high.

"Some buyers will reconsider jumping into the market; others will speed up their (home) purchases before rates go higher," Jed Kolko, chief economist at Trulia, told AP.

SV150 market report: Markets keep improving, while Apple keeps sliding

Stock indexes gained for the third consecutive session Thursday, as more good news about the economy arrived in the form of rising consumer spending and falling unemployment applications, pushing the Dow Jones higher than 15,000 again. Silicon Valley stocks lagged the rest of the market slightly, however, as Apple's shares continued a sharp decline that weighed on the SV150 index.

The Cupertino company's stock declined 1.1 percent Thursday to close at $393.78, its lowest closing mark since April. Apple suffered another analyst downgrade, at least its third this week -- Susquehanna Chris Caso lowered the company's price target from $480 to $440 Thursday, following similar moves from Jefferies analyst Peter Misek and Oppenheimer's Ittai Kidron earlier this week, which helped originally pushed the stock lower than $400. Apple also suffered setbacks not involving analysts: A judge denied its attempt to include the new Samsung Galaxy S4 smartphone in the companies' next patent battle in a San Jose courtroom, and manufacturing partner Foxconn introduced a smartwatch that connects with the iPhone before Apple could push its own similar device to market.

Other large-cap Silicon Valley companies picked up the slack, however: Hewlett-Packard (HPQ) jumped 3.2 percent to $24.77, and eBay (EBAY) gained 1.6 percent to $52.14 as its PayPal payments service sought to conquer the final frontier. Oracle (ORCL) increased 1 percent to $30.45 after announcing its third software partnership in as many days, then founder and CEO Larry Ellison joined Salesforce founder and CEO Marc Benioff in a post-trading conference call in which the two rivals publicly buried the hatchet. Salesforce gained 2.2 percent to $38.84 and Oracle's most recent partner, San Mateo's Netsuite, moved 3.7 percent higher to $91.78.

Facebook gained 2.1 percent to close at $24.66 despite losing a high-profile executive to San Francisco payments startup Square, and Yahoo (YHOO) moved 0.7 percent higher after announcing a redesigned Yahoo News offering. Adobe (ADBE) gained 0.6 percent to $45.93 in regular trading, then announced after the bell that it had agreed to pay $600 million in case for Neolane, a French marketing-software firm.

Up: Tesla, Juniper, HP, Pandora, Intuit (INTU), Zynga, Facebook, eBay, Netflix (NFLX), Oracle, Cisco (CSCO), Yahoo, VMware, LinkedIn

Down: SolarCity, Yelp, Advanced Micro Devices, Apple, Nvidia, Gilead, Workday, Applied Materials

The SV150 index of Silicon Valley's largest tech companies: Up 6.02, or 0.5 percent, to 1,219.69

The tech-heavy Nasdaq composite index: Up 25.64, or 0.76 percent, to 3,401.86

The blue chip Dow Jones industrial average: Up 114.35, or 0.77 percent, to 15,024.49

And the widely watched Standard & Poor's 500 index: Up 9.94, or 0.62 percent, to 1,613.2

Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.