US mortgage activity gauges drop to lowest levels since August
US MORTGAGE applications for both home purchases and refinancing dropped last week to the lowest levels since August, hobbled by a recent surge in mortgage rates.
Mortgage Bankers Association’s (MBA) gauge of home purchases declined 5.1 per cent in the week ended Oct 18, marking the third straight decrease. The refinancing index retreated another 8.4 per cent last week after slumping by the most since March 2020.
The contract rate on a 30-year fixed mortgage held at 6.52 per cent, the data released on Wednesday (Oct 23) showed. A month ago, the rate stood at a two-year low of 6.13 per cent.
Mortgage rates have been moving up in concert with US Treasury yields on expectations Federal Reserve policymakers will be more prudent with interest-rate cuts as the economy proves resilient. Higher home financing costs, along with still-elevated asking prices, risk extending a more than year-long period of sluggish housing demand.
Yields on 10-year Treasury notes rose on Tuesday to 4.2 per cent, the highest since late July and up from a 15-month low of 3.6 per cent on Sep 17 – one day before the Fed lowered borrowing costs by half a point.
The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data cover more than 75 per cent of all retail residential mortgage applications in the US. BLOOMBERG
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