U.S. mortgage interest rates rise to highest level since 2006

Applied Energetics

12/10/2022 12:00

Oct 12 (Reuters) - The average interest rate on the most
popular U.S. home loan rose to its highest level since 2006 as
the housing sector continued to bear the brunt of tightening
financial conditions, data from the Mortgage Bankers Association
(MBA) showed on Wednesday.
    Mortgage rates have more than doubled since the beginning of
the year as the Federal Reserve pursues an aggressive path of
interest rate hikes to bring down stubbornly high inflation.
    Those actions, designed to cool the economy sufficiently to
curb price pressures, have weighed heavily on the
interest-rate-sensitive housing sector as expectations for Fed
tightening have led to a surge in Treasury yields. The yield on
the 10-year note  US10YT=RR  acts as a benchmark for mortgage
rates. 
    The average contract rate on a 30-year fixed-rate mortgage
rose by 6 basis points to 6.81% for the week ended Oct. 7 while
the MBA's Market Composite Index, a measure of mortgage loan
application volume, fell 2.0% from a week earlier and is down
roughly 69% from one year ago. 
    Its Purchase Index, a measure of all mortgage loan
applications for purchase of a single family home, fell 2.1%
from the prior week and is 39% lower than a year ago, while
MBA's refinance Index declined 1.8% last week and is down 86%
from one year ago.
    Homebuilding and sales have weakened significantly in recent
months, with home resales posting seven straight months of
declines. However, home prices remain high even as house price
growth slows, eroding affordability for buyers who are still
competing due to a shortage of properties for sale. 
 (Reporting by Lindsay Dunsmuir; Editing by Bernadette Baum)
 ((Lindsay.Dunsmuir@thomsonreuters.com; +1 646 384 8221;))