US mortgage rates jump above 7% to the highest level since November

US MORTGAGE rates rose last week to the highest since November, edging close to levels last seen more than two decades ago.

The contract rate on a 30-year fixed mortgage increased 22 basis points to 7.07 per cent in the week ended July 7, according to Mortgage Bankers Association data out on Wednesday (Jul 12). The weekly jump during the period that included the Fourth of July holiday was also among the biggest since late last year.

Treasuries sold off last week after a slew of reports showed the labour market, while cooling somewhat, remains largely resilient, bolstering bets that the Federal Reserve will resume raising interest rates this month. Wednesday’s release of the June consumer price index will likely solidify those expectations, meaning mortgage rates risk rising further along with other borrowing costs.

The MBA’s index of refinancing applications declined a seasonally adjusted 1.3 per cent from the prior week. However, the home-purchase gauge rose, contributing to an advance in the overall measure of mortgage applications.

The 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