US mortgage rates edge down to 6.51%: Mortgage Bankers Association

[SAN FRANCISCO] The interest rate on the most popular US home loan ticked down last week for the first time since the start of the Iran war.

However, it is not enough to rejuvenate a housing market that is pricing out many buyers, with a combination of elevated borrowing costs and expensive homes.

The Mortgage Bankers Association (MBA) said on Wednesday (Apr 8) that the contract rate on a 30-year, fixed-rate mortgage fell six basis points (bps) to 6.51 per cent for the week ended Apr 3, retreating from the seven-month high hit the prior week.

Refinance applications sank 2.8 per cent, and purchase applications, while up about 1 per cent from the previous week, were 7 per cent lower than a year earlier, it said.

Mortgage rates have climbed by 42 bps since Feb 28, when the US and Israel launched strikes on Iran, driving up yields on the Treasury bonds that lenders use to set rates.

Besides raising the cost of loans, the Iran war has also hit consumers’ daily budgets as fuel prices surge.

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Housing affordability has been a key political issue for the administration of US President Donald Trump, which is preparing what it says will be a “major housing announcement” on Wednesday.

Earlier this year, Trump proposed banning institutional investors from buying single-family homes.

He told Fannie Mae and Freddie Mac – the government-controlled entities that back the majority of US home loans – to purchase US$200 billion in mortgage-backed securities to push down the borrowing rates. REUTERS