The contract rate on a 30-year fixed rate mortgage jumped to 3.23 per cent in the week ended Oct 15 from 3.18 per cent the week before, the MBA reported
Interest rates on the most popular type of US home loan hit a 6-month high last week as global rates continued to rise against a bout of stiff inflation and expectations that central banks will back further away from their pandemic-era easy money policies.
The contract rate on a 30-year fixed rate mortgage jumped to 3.23 per cent in the week ended Oct 15 from 3.18 per cent the week before, the Mortgage Bankers Association (MBA) reported on Oct 20 in its weekly survey of conditions in the US home lending market.
That was the highest level since early April and is up by more than a quarter percentage point since the end of July.
The increase in rates helped drive overall mortgage application volumes down by 6.3 per cent to the lowest since July, led by a 7.1 per cent drop in refinancing applications, the MBA said. Refinancing application volumes are also at their lowest since July, just fractionally above their lowest levels since early 2020.
Applications for loans to buy a home dropped 4.9 per cent to the lowest since early September.
Purchase activity declined and was 12 per cent lower than a year ago, said Joel Kan, MBA’s Associate vice-president of economic and industry forecasting. Insufficient housing supply and elevated home price growth continue to limit options for would-be buyers.
How quickly that situation is resolved remains the big unknown in the US residential real estate market. On Oct 19, the Commerce Department reported that US homebuilding unexpectedly dropped in September and residential construction permits fell to a 1-year low amid acute shortages of raw materials and labour.