US 30-yr mortgage rate tops 7% for first time since last fall

Applied Energetics

12/07/2023 12:37

July 12 (Reuters) - The interest rate on the most
popular U.S. home loan leapt back over 7% last week for the
first time since last fall as financial markets adjusted to an
expectation that the Federal Reserve would need to keep its
benchmark rate higher for longer to beat back inflation.
    The average contract rate on a 30-year fixed-rate mortgage
jumped 22 basis points to 7.07% in the week ended July 7, the
Mortgage Bankers Association said Wednesday in their weekly
recap of home loan applications activity. That was the highest
since November and brings that rate to within 10 basis points of
last October's two-decade high in home loan borrowing costs.
    "Incoming economic data continue to send mixed signals about
the economy, with the overall impact leaving Treasury yields
higher last week as markets expect that the Federal Reserve will
need to hold rates higher for longer to slow inflation. All
mortgage rates in our survey followed suit," said MBA Deputy
Chief Economist Joel Kan.
    The rate on "jumbo" loans for amounts greater than $726,200
rose to 7.04%, the highest since MBA began tracking that data
series in 2011.
    Rate futures markets expect the Fed to resume interest rate
hikes two weeks from now after foregoing an increase last month
to take the time to assess the effects of the aggressive actions
it has taken since March 2022 to contain the highest inflation
in four decades. The Fed has lifted rates by 5 percentage points
since then from near zero, and officials have signaled that
rates may rise by perhaps another half point by year end.

 (Reporting By Dan Burns; Editing by Chizu Nomiyama)
 ((Daniel.Burns@thomsonreuters.com;))