Rates on home loans went up for only the second week since Halloween, as bond and mortgage traders began to worry that the economic stimulus package could bring inflation.

The benchmark 30-year fixed-rate mortgage rose 31 basis points to 5.59 percent, according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week's survey had an average total of 0.30 discount and origination points. One year ago, the mortgage index was 5.57 percent; four weeks ago, it was 5.84 percent.

The benchmark 15-year fixed-rate mortgage rose 31 basis points to 5.2 percent. The benchmark 5/1 adjustable-rate mortgage rose 7 basis points to 5.58 percent.

In Bankrate's weekly survey, the benchmark 30-year rate in the last week of October was 6.77 percent, the highest of the year. Since then, the rate had fallen every week but one -- until now. Bankers point a finger at the size of the proposed economic stimulus package making its way through Congress: $825 billion.

At that price, the economic stimulus package would amount to about $2,750 per person, or $11,000 for a family of four -- enough to pay for one-third of a nice minivan, from the headlights to front seats. Mortgage bond traders worry that prices for goods and services would rise rapidly if the American people borrowed such a bundle of money to climb out of the recession.

Obama spending fear
When bond investors foresee inflation, the result is higher bond yields. That carries into higher mortgage rates. Maybe it's not a coincidence that, in the last week, the biggest jump in bond yields happened on President Barack Obama's inauguration day. The new president and his advisers have said that it would be safer to err on the side of overspending, rather than not spending enough.

"I think it's the Obama spending fear," says Michael Moskowitz, president of Equity Now, a mortgage bank based in New York. That succinct explanation is pretty much the consensus in the mortgage industry. At the same time, some brokers have been advising customers to float, instead of locking a rate, on the theory that rates will drop again.

The steady decline in rates this fall and winter started a refinancing boomlet. The workload has exceeded the capacity of some lenders to process loan applications. When lenders reach capacity, they raise rates to slow the flow of applications. That's why it's a good idea to shop around.

Some lenders are telling borrowers that 30 days isn't long enough to process the loan, so they're recommending that borrowers lock their mortgage rates for 60 or 90 days. That gives borrowers plenty of time to break their rate locks if rates decline substantially -- resulting in more loan applications and more delays.