US mortgage rates remain at highest since November

THE average interest rate on the most popular US home loan remained last week at its highest level since November 2022. This came as stronger-than-expected readings on inflation, job gains and consumer spending caused investors to hike their bets that the Federal Reserve would have to keep raising its policy rate through the middle of the year.

Data from the Mortgage Bankers Association (MBA) on Wednesday (Feb 1) showed that the average contract rate on a 30-year fixed-rate mortgage increased by nine basis points (bps) to 6.71 per cent for the week ended Feb 24. This was the third weekly rise in mortgage rates after several weeks of declines.

The rate has risen more than 50 bps over the past month.

Mortgage rates soared to more than 7 per cent last October as the US central bank raised its benchmark policy rate in 2022 at the fastest pace in 40 years. But the rates began to ebb late last year, after signs that inflation was on the wane. The rate-sensitive housing sector has taken the brunt of the Fed’s actions.

The rise in mortgage rates has translated to fewer would-be purchasers. The MBA’s market composite index, a measure of overall mortgage loan application volume, fell 5.7 per cent from a week earlier. Meanwhile, its purchase composite index, which measures all mortgage loan applications for purchase of a single family home, declined 5.6 per cent. REUTERS