US mortgage rates rise, extending gains for third straight week

[WASHINGTON] Mortgage rates in the US, already the highest in almost a year, rose for a third week, squeezing affordability as home price growth accelerates. 

The average for a 30-year, fixed loan climbed to 6.58 per cent from 6.55 per cent a week earlier, Freddie Mac said in a statement onThursday (23 Jul). The rate was 6.74 per cent a year ago.

The property market is facing pressure from the recent flareup in hostilities with Iran that is roiling energy markets and threatening to drive up inflation and push borrowing costs higher. Until the fragile ceasefire fell apart earlier this month, rates were beginning to drift lower, giving a lift to demand. 

In mid-July, home prices were up 1.7 per cent from a year earlier, the largest increase in more than three years, according to data from Intercontinental Exchange Inc. Annual gains were the highest in upstate New York, up 8.7 per cent in Rochester, 7.4 per cent in Syracuse and 6.8 per cent in Albany, while the steepest decline was in Cape Coral, Florida, down 3 per cent. 

Bright MLS chief economist Lisa Sturtevant expects elevated mortgage rates to result in a slow summer.

“Higher gas prices and concerns about overall inflation rising have created more financial strain for would-be buyers,” she said.

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Investors see the Federal Reserve hiking interest rates at least by its September meeting as persistent inflationary forces keep price growth well above the central bank’s 2 per cent target. Interest-rate futures as of Thursday reflected a better than 1-in-3 chance of a move at the next gathering, July 28-29, though economists surveyed by Bloomberg universally see no action this month. BLOOMBERG