WASHINGTON–For the first time since 2019, rates on the most popular type of home loan in the U.S. have topped 4%.
Analysts said the rate increase is coming as markets anticipate the Federal Reserve will respond to the highest inflation in a generation with an aggressive run of rate hikes.
The Mortgage Bankers Association reported its weekly measure of the average contract rate on a 30-year, fixed-rate mortgage climbed to 4.05% in the week ended Feb. 11 from 3.83% a week earlier. That was the highest since October 2019 and the largest weekly increase since March 2020 when the onset of the coronavirus pandemic was roiling financial markets, according to the MBA.
The strongly rebounding economy has also reset and driven up the yields on the Treasury securities that influence mortgage rates, and home financing costs have followed suit: the MBA's 30-year contract rate has climbed roughly a full percentage point in about five months.
As a result, the rate rise is crimping application volumes for mortgage refinancings in particular, with the Mortgage Bankers Association reporting its refinancing index dropping to a two-year low and the refinancing share of all loan applications at the lowest level since July 2019.
Overall loan application volumes fell 5.4% last week and purchase applications dropped 1.2%.
Analysts said the rate increase is coming as markets anticipate the Federal Reserve will respond to the highest inflation in a generation with an aggressive run of rate hikes.
The Mortgage Bankers Association reported its weekly measure of the average contract rate on a 30-year, fixed-rate mortgage climbed to 4.05% in the week ended Feb. 11 from 3.83% a week earlier. That was the highest since October 2019 and the largest weekly increase since March 2020 when the onset of the coronavirus pandemic was roiling financial markets, according to the MBA.
The strongly rebounding economy has also reset and driven up the yields on the Treasury securities that influence mortgage rates, and home financing costs have followed suit: the MBA's 30-year contract rate has climbed roughly a full percentage point in about five months.
As a result, the rate rise is crimping application volumes for mortgage refinancings in particular, with the Mortgage Bankers Association reporting its refinancing index dropping to a two-year low and the refinancing share of all loan applications at the lowest level since July 2019.
Overall loan application volumes fell 5.4% last week and purchase applications dropped 1.2%.
CUTODAY
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