U.S. mortgage interest rates jump to 6.52%, highest since mid-2008

Applied Energetics

28/09/2022 12:00

Sept 28 (Reuters) - The average interest rate on the
most popular U.S. home loan climbed to its highest level since
August 2008, data from the Mortgage Bankers Association (MBA)
showed on Wednesday.
    Rising mortgage rates are increasingly weighing on the
interest-rate-sensitive housing sector as the Federal Reserve
pushes on with aggressively lifting borrowing costs to curb high
inflation.
    The average contract rate on a 30-year fixed-rate mortgage
rose by 27 basis points to 6.52% for the week ended Sept. 23, a
level not seen since the financial crisis and the Great
Recession. 
    Fed policymakers raised the central bank's benchmark
overnight interest rate by three-quarters of a percentage point
last week, the third straight hike of that size, and
acknowledged "pain" ahead for the economy as they seek to cool
demand.  urn:newsml:reuters.com:*:nL4N30X11F
    Fed Chair Jerome Powell also explicitly called out the
housing market and said it would probably go through a
"correction" after a period of "red hot" price increases.
 urn:newsml:reuters.com:*:nL1N30S2EY
    Expectations for Fed tightening have led to a surge in
Treasury yields since the start of this year. The yield on the
10-year note  US10YT=RR  acts as a benchmark for mortgage rates.
The cost of home loans has risen by more than a percentage point
over the past six weeks.
    The MBA also said its Market Composite Index, a measure of
mortgage loan application volume, fell 3.7 percent from a week
earlier. Its Refinance Index dropped 10.9% from the prior week
and is now at a 22-year low.
 (Reporting by Lindsay Dunsmuir; Editing by Kim Coghill)
 ((Lindsay.Dunsmuir@thomsonreuters.com; +1 646 384 8221;))