Average U.S. mortgage interest rate rises to 5.53%, applications up

Applied Energetics

11/05/2022 12:00

May 11 (Reuters) - The average interest rate on the most
popular U.S. home loan rose to its highest level since 2009 last
week and demand for mortgages jumped for a second straight week
despite the rising costs, Mortgage Bankers Association data
showed on Wednesday.
    The average contract rate on a 30-year fixed-rate mortgage
increased to 5.53% in the week ended May 6 from 5.36% a week
earlier, the MBA survey showed. 
    It has now risen 242 basis points from 12 months ago, the
sharpest rise in decades, as the U.S. Federal Reserve tightens
financial conditions to try to dampen demand across the economy
as it battles a 40-year-high inflation rate. 
    The housing market, flashing signs of overheating over the
past two years, is seen as a particularly rate-sensitive sector
and Fed policymakers are keen to sap some of its current double
digit annual price growth.
    Whether they can cool the market as much as they hope
remains to be seen, with price growth fueled by record-low
housing stock, unusually high household savings, an extremely
tight job market and increased worker mobility.
    Mortgage applications rose last week for the second week in
a row. The MBA said its Purchase Composite Index, a measure of
all mortgage loan applications for purchase of a single family
home, increased 4.5% from a week earlier. However, this was
still below the levels seen just a month ago and almost 8% lower
than the same week one year ago.

 (Reporting by Lindsay Dunsmuir; Editing by Mark Heinrich)
 ((Lindsay.Dunsmuir@thomsonreuters.com; +1 646 384 8221;))