Mortgage rates have risen to their highest levels in six months, threatening to delay a housing turnaround by discouraging potential home buyers.The average rate on a 30-year, fixed-rate home loan climbed to 5.29% for the week ended Thursday, Freddie Mac reported. That’s the highest since December and up from 4.91% a week earlier.

In early and late April, the rate was at a record low: 4.78%.

“There’s a real risk interest rates could climb up beyond 6% or 6.5%, which can immediately shut down the housing recovery and undermine the national economy,” says Bernard Baumohl, chief global economist at the Economic Outlook Group. “That’s the big battle to watch in the next couple of months.”

Higher mortgage rates are already having an impact. Applications to buy a home or refinance a mortgage tumbled 16% in the week ended May 29 compared with a week earlier, the Mortgage Bankers Association reported this week. Refinancing activity fell 24%. The MBA’s purchase index rose 4.3%.

Refinancings’ share of mortgage activity dropped to 62.4% of total applications from 69.3% the previous week.

While the Federal Reserve is trying to hold down mortgage rates by buying mortgage-backed securities and Treasury securities, other factors are driving up rates.

Mortgage rates have been pushed up by recent increases in yields on long-term Treasury securities, a benchmark for mortgage rates.

If interest rates rise more, that could make a purchase too expensive for some buyers. Weakened demand would delay the reduction of a high inventory of unsold homes, which is considered essential for the market’s recovery.

Some economists say the fundamental building blocks of a housing recovery are already in place and that rising interest rates will not derail the process.

“(Higher interest rates) could slow down refinancing, but the housing recovery is going to be one that takes time, and we’ll see setbacks on the way,” says Michael Darda, chief economist at MKM Partners. “I don’t think the housing market recovery is going to be derailed.”

Lawrence Yun, chief economist at the National Association of Realtors, say rising interest rates often have a short-term effect of driving more buyers into the market. Those buyers rush to buy so they can lock in rates before they go still higher.

But that impact is short lived.

“Further rises will impact buyers. That’s a risk,” Yun says. “Mortgage rates have been the lifeblood of the market.”

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