US 30-year mortgage rate climbs to a two-month high of 6.87%
US MORTGAGE rates rose last week to a two-month-high, reversing some of the momentum in the nation’s housing recovery.
The contract rate on a 30-year fixed mortgage increased 7 basis points in the week ended Feb 9 to 6.87 per cent, the highest since early December, according to Mortgage Bankers Association (MBA) data released on Wednesday (Feb 14).
The rise in borrowing costs is unwelcome news for a resale market plagued by low inventory, with many homeowners already locked into low mortgage rates and unwilling to list their homes.
The MBA’s index of applications for home-purchase mortgages fell 2.5 per cent to 149.6, a five-week low. In January, the gauge reached the highest level since April, but has declined in each of the last three weeks.
Meantime, the MBA’s overall index for mortgage applications, which tracks both home purchases and refinancing, slipped 2.3 per cent last week. The MBA’s index for refinancing fell 2.1 per cent.
Home buyers and sellers alike have been awaiting a sustained drop in mortgage rates, which have come down from their peaks near 8 per cent in the fall, but are still double their levels from late 2021. The Federal Reserve has signalled a willingness to cut rates this year, but inflation has been stubborn.
Borrowing costs risk staying elevated until further progress is made bringing inflation closer to the Fed’s goal.
The MBA survey uses responses from mortgage bankers, commercial banks and thrifts and has been conducted weekly since 1990. The data cover more than 75 per cent of all retail residential mortgage applications in the US. BLOOMBERG
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