US mortgage rates push back above 7%, slowing financing activity

US MORTGAGE rates climbed back above 7 per cent last week, driving a decline in applications to finance home purchases.

The contract rate on a 30-year fixed mortgage rose 10 basis points, the steepest increase in more than two months, to 7.03 per cent in the week ended Jun 28. Figures from the Mortgage Bankers Association (MBA) also showed the five-year adjustable-rate mortgage climbed nine basis points to a three-week high of 6.38 per cent.

A gauge of mortgage applications to buy a home fell 3.3 per cent, the first decline since the end of May, the figures released on Wednesday (Jul 3) showed. The drop indicates potential homebuyers remain sensitive to changes in borrowing costs and suggests a bumpy path to a more durable recovery for the housing market.

MBA’s overall index of applications, which includes those for home purchases and refinancing, slipped 2.6 per cent. The group’s refinancing gauge fell for a third straight week.

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