(Jason Reed/Reuters)

Mortgage rates soared to their highest levels since early May this week, but the rally may be short lived.

According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average shot up to 4.03 percent with an average 0.5 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 3.96 percent a week ago and 3.42 percent a year ago.

The 30-year fixed rate has jumped 15 basis points in two weeks (a basis point is 0.01 percentage point) and has risen above the 4 percent mark for the first time in nearly two months.

The 15-year fixed-rate average climbed to 3.29 percent with an average 0.5 point. It was 3.22 percent a week ago and 2.72 percent a year ago. The five-year adjustable rate average rose to 3.28 percent with an average 0.5 point. It was 3.21 percent a week ago and 2.76 percent a year ago.

“Rates continued to increase last week given increasing evidence that the Fed and other central banks are more likely to raise rates given the pickup in economic growth in their respective economies,” said Michael Fratantoni, Mortgage Bankers Association’s chief economist.  “Additionally, minutes from the June [Federal Open Market Committee] meeting showed clear plans to start reducing the size and scope of the Fed’s balance sheet and to continue raising the fed funds rate, a signal of confidence in the U.S. economy and job market. On this news, the U.S. 10-year Treasury yield has increased 18 basis points over the past month, and mortgage rates are back to their highest level since May.”

Fed chair Janet L. Yellen’s testimony before Congress came too late to be factored into this week’s Freddie Mac survey, but her comments about the pace of interest rate hikes and the central bank’s reduction of its balance sheet will likely affect rates going forward.

The experts surveyed by Bankrate.com, which puts out a weekly mortgage rate trend index, were mixed on where rates were headed this week. The majority said rates will remain relatively stable in the coming week, about a quarter said they will go down and about a third said they would rise. Shashank Shekhar, chief executive of Arcus Lending, is one who expects rates to fall.

“Janet Yellen’s remarks during her Semiannual Monetary Policy Report to the Congress turned out way more dovish than anyone expected,” Shekhar said. “The report talks about inflation not being a major concern and softening the stance on unwinding the Fed’s balance sheet. She also hinted at only a limited number of gradual rate hikes. All this, coupled with political upheaval around Trump Jr.’s meeting with Russian attorney, should bolster the mortgage-backed securities and help with a tad lower mortgage rate for the consumer.”

Meanwhile, higher rates caused mortgage applications to retreat last week, according to the latest data from the MBA. The market composite index — a measure of total loan application volume — decreased 7.4 percent. The refinance index tumbled 13 percent, while the purchase index fell 3 percent.

The refinance share of mortgage activity accounted for 42.1 percent of all applications.

Fratantoni pointed out the refinance index reached its highest level of the year in June when the 30-year fixed mortgage rate fell to its lowest level for the year. Since then rates have wandered higher and the refinance index has fallen 20 percent to its lowest level since the beginning of the year.

“The purchase index decreased 2.5 percent over the week, but was still 3.5 percent higher compared to the same week a year ago,” Fratantoni said. “We saw a 2.7 percent increase in government purchase applications, which contributed to a decrease in the average purchase application loan size. Conventional purchase applications decreased 4.3 percent.”