U.S. mortgage interest rates top 5%, buyers look to lock in rates

Applied Energetics

13/04/2022 12:00

April 13 (Reuters) - The average interest rate on the most
popular U.S. home loan rose to more than 5% last week, the
highest level since November 2018, and homebuyers hurried to
make purchases before costs rise further, the latest weekly
survey from the Mortgage Bankers Association (MBA) showed on
Wednesday.
    The average contract rate on a 30-year fixed-rate mortgage
increased to 5.13% in the week ended April 8 from 4.90% a week
earlier. It is up more than 1.5 percentage points since the
start of the year as the Federal Reserve has begun to tighten
financial conditions to cool demand in the economy amid high
inflation.
    Fed policymakers now anticipate a serious of swift interest
rate hikes until the end of this year at least as they seek to
bring down inflation, after they raised the benchmark overnight
lending rate last month for the first time in three years.
    Investors see the Fed bringing its federal funds rate to
2.5%-2.75% by the end of 2022, up from the current target range
of between 0.25% and 0.5%.
    The run up in borrowing costs, which has dampened demand for
mortgage applications overall since the start of the year,
caused a small bump in activity last week as homebuyers rushed
to lock in rates before they move even higher.
    The MBA said its Purchase Composite Index, a measure of all
mortgage loan applications for purchase of a single family home,
increased 1.4% on a seasonally adjusted basis to 261.8, while
the refinance index fell 4.9%.
    The MBA's latest economic forecast was also released on
Wednesday, with mortgage originations seen declining 35.5.% in
2022 from a year earlier to $2.58 trillion.
    Purchase originations are still seen rising, however, and
are expected to increase 4% from last year to a record $1.72
trillion in 2022. 

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