US mortgage interest rates rise for 4th straight week

A ‘for sale’ sign is seen outside a house in New York June 19, 2012. REUTERS/Shannon Stapleton/File Photo

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Jan 19 (Reuters) – The interest rate on the most popular U.S. home loan rose for the fourth straight week last week as residential real estate borrowing costs are now the highest in nearly two years , with financial markets predicting that the Federal Reserve will raise rates sooner. and faster than expected to fight inflation.

The Mortgage Bankers Association said on Wednesday its weekly measure of the average contract rate on a 30-year fixed-rate mortgage climbed to 3.64% in the week ending Jan. 14, from 3.52% a week earlier. early. It was the highest since March 2020, when the pandemic triggered a recession and sent borrowing costs to historic lows as the Fed cut its benchmark interest rate to near zero.

With inflation at its highest rate in a generation and the labor market nearing full employment, we now see the Fed rapidly reining in the accommodative measures it put in place in the spring of 2020, and markets Financiers are frantically reassessing a first central bank rate hike by mid-March.

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This reset has pushed up yields on Treasury securities that influence mortgage rates, and housing finance costs have followed suit: the rate on 30-year MBA contracts rose from 3.27% in mid-December.

Rising rates are reducing mortgage refinance application volumes, but appear to be helping to boost applications for home purchase loans, which saw the biggest increase in six months last week as potential buyers seek to lock in rates which, although rising, are still historically low.

The overall volume of loan applications rose 2.3% last week thanks to a 7.9% increase in loans to buy a home, while refinancing applications fell 3.1% to their highest level. low level in more than two years.

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Reporting by Dan Burns; Editing by Leslie Adler

Our standards: The Thomson Reuters Trust Principles.

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