U.S. mortgage interest rates jump to highest level since November - MBA

Applied Energetics

22/02/2023 12:00

Feb 22 (Reuters) - The average interest rate on the most
popular U.S. home loan rose last week to its highest since
November as bond markets took fright that the Federal Reserve
might have to continue tightening policy through summer to
subdue inflation, data from the Mortgage Bankers Association
(MBA) showed on Wednesday.
    The average contract rate on a 30-year fixed-rate mortgage
jumped by 23 basis points to 6.62% for the week ended Feb. 17
following stronger-than-expected retail sales and labor market
data as well as still robust monthly inflation readings, which
compelled investors to up their bets that the U.S. central bank
will have to keep raising its policy rate through the summer.
    That has caused a spike in U.S. Treasury yields, and a
second straight weekly increase in mortgage rates after several
weeks of declines. The yield on the 10-year note  US10YT=RR 
acts as a benchmark for mortgage rates.
    Mortgage rates soared to more than 7% last October as the
central bank raised its benchmark policy rate in 2022 at the
fastest pace in 40 years, but had began to ebb after signs late
last year that inflation was on the wane. The interest-rate
sensitive housing sector has borne the brunt of the Fed's
actions.
    The renewed rise on mortgage rates caused more potential
buyers to sit on the sidelines. The MBA's Purchase Composite
Index, a measure of all mortgage loan applications for purchase
of a single family home, dropped 18.1% from the prior week to
its lowest level since 1995.
    The MBA's Market Composite Index, a measure of overall
mortgage loan application volume, also declined 13.3% from a
week earlier.
    Other housing data on Tuesday showed that U.S. existing home
sales dropped to the lowest level in more than 12 years in
January, but the pace of decline slowed, raising cautious
optimism that the housing market slump could be close to
reaching a bottom.
 (Reporting by Lindsay Dunsmuir; Editing by Mark Potter)
 ((Lindsay.Dunsmuir@thomsonreuters.com; +1 646 384 8221;))