* Two-year swap spread posts biggest widening since Feb

* Three-month dollar Libor sets another record low (Updates market action, changes dateline, previous LONDON)

By Richard Leong

NEW YORK, June 1 (Reuters) - A benchmark for U.S. corporate borrowing costs jumped on Monday on concerns that big swings in interest rates could hurt the recovery in the housing market and forestall an economy recovery.

Risk premiums in the U.S. interest rate swap market ended broadly higher. This made it more expensive for lenders and other firms to exchange fixed-rate dollars with floating-rate ones to hedge against rate fluctuations.

"People are worried about the volatility in rates," said James Caron, head of global rates research at Morgan Stanley in New York.

Swap and other short-term spreads versus less risky Treasuries grew even though the three-month rate banks charge each other for dollars fell to a record low.

Most dollar rates have been on a roller coaster since last week. The 10--year Treasury note yield -- a benchmark for many long-term consumer loan rates -- rose to 3.75 percent, a six-month high last week.

Interest rates on 30-year fixed rate mortgages, the most widely held type of U.S. home loans, have risen above their record lows in the mid-to-high 4.00 percent range in April, according to industry sources.