US 30-year mortgage rate drops below 7%, spurring home purchases

US MORTGAGE rates dropped back below 7 per cent for the first time in a month, spurring an increase in applications for home purchases.

The contract rate on a 30-year fixed mortgage decreased 18 basis points, the biggest decline in nearly three months, to 6.84 per cent in the week ended Mar 8, according to Mortgage Bankers Association (MBA) data released on Wednesday (Mar 13).

The MBA’s index of mortgage applications for home purchases increased 4.7 per cent to a four-week high of 147.7.

Though mortgage rates are down from their peak in October, when they reached the highest levels since 2000, they are still more than twice as high as in 2021. While housing demand has stabilised, a sustained drop in rates would help bring more prospective buyers off the sidelines.

The MBA’s overall index for mortgage applications, which tracks both home purchases and refinancing, climbed 7.1 per cent last week to a four-week high. The measure for refinancing rose 12.2 per cent, the most in five weeks.

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