Feb 22 (Reuters) – The average interest rate on the most popular US home loan rose to its highest level since November last week as bond markets feared the Federal Reserve would have to continue to tighten policy until the summer to contain inflation, data of the mortgage interest deduction. The Bankers Association (MBA) showed this on Wednesday.
The average contract rate on a 30-year fixed-rate mortgage rose 23 basis points to 6.62% for the week ended Feb. 17, reflecting better-than-expected retail sales and labor market data, as well as still-robust monthly inflation numbers, which forced investors to raise their bets that the US Federal Reserve will have to keep raising its policy rate throughout the summer.
That has led to a spike in US Treasury yields and a second consecutive weekly increase in mortgage rates after several weeks of declines. The return on the 10-year note serves as a benchmark for the mortgage interest rate.
Mortgage rates rose to more than 7% last October as the central bank raised its benchmark rate in 2022 at its fastest pace in 40 years, but began to fall after signs late last year that inflation was easing. The interest rate sensitive housing sector has taken the brunt of the Fed’s actions.
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The renewed rise in mortgage rates left more potential buyers on the sidelines. The MBA’s Purchase Composite Index, a measure of all mortgage applications for single-family home purchases, fell 18.1% from the previous week to its lowest level since 1995.
The MBA’s Market Composite Index, a measure of the total number of mortgage loan applications, also fell 13.3% from a week earlier.
Other housing data on Tuesday showed that existing home sales in the US fell to their lowest level in more than 12 years in January, but the pace of the decline slowed, sparking cautious optimism that the housing market slump could near a bottom. can reach.
Reporting by Lindsay Dunsmuir; Edited by Mark Potter
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