A carpenter works on building new townhomes that are still under construction in Tampa, Florida, U.S., May 5, 2021. REUTERS/Octavio Jones/File Photo
Sept 14 (Reuters) - The average interest rate on the most popular U.S. home loan rose above 6% for the first time since 2008 and is now more than double the level it was one year ago, Mortgage Bankers Association (MBA) data showed on Wednesday.
Rising mortgage rates are increasingly weighing on the interest-rate sensitive housing sector as the Federal Reserve pushes on with aggressively lifting borrowing costs in order to tame high inflation. The central bank has raised its benchmark overnight lending rate by 225 basis points since March.
Expectations for Fed tightening have led to a surge in Treasury yields since the start of this year. The yield on the 10-year note acts as a benchmark for mortgage rates.
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The average contract rate on a 30-year fixed-rate mortgage rose by 7 basis points to 6.01% for the week ended Sept. 9, a level not seen since towards the end of the financial crisis and Great Recession.
The MBA also said its Market Composite Index, a measure of mortgage loan application volume, declined 1.2% from a week earlier and is now down 64.0% from one year ago. Its Refinance Index fell 4.2% from the prior week and was down 83.3% compared to one year ago.
A worse-than-expected key inflation reading on Tuesday cemented expectations the Fed will be forced to deliver a third straight 75-basis point interest rate hike at its policy meeting next week, with investors now predicting the central bank will have to hike rates faster and further than previously thought. read more
The impact of higher interest rates is being felt across the housing sector. New home sales plunged to a 6-1/2-year low in July while home resales and single-family housing starts are at two-year lows. But house prices remain elevated amid a critical shortage of affordable homes, making a housing market collapse unlikely.
Reporting by Lindsay Dunsmuir; Editing by Toby Chopra
Our Standards: The Thomson Reuters Trust Principles.
wtf-you-saying on September 14th, 2022 at 16:36 UTC »
I remember when getting my place a 6.25 felt like the biggest score ever back in 2005. It's amazing how low rates dropped after the 2008 catastrophe.
OlympicAnalEater on September 14th, 2022 at 15:26 UTC »
God bless those that bought their home in 2019 - 2020 and refinance their loans with locked interest rate in 2020.
gentlegranit on September 14th, 2022 at 14:00 UTC »
Sept 14 (Reuters) - The average interest rate on the most popular U.S. home loan rose above 6% for the first time since 2008 and is now more than double the level it was one year ago, Mortgage Bankers Association (MBA) data showed on Wednesday.
Rising mortgage rates are increasingly weighing on the interest-rate sensitive housing sector as the Federal Reserve pushes on with aggressively lifting borrowing costs in order to tame high inflation. The central bank has raised its benchmark overnight lending rate by 225 basis points since March.
Expectations for Fed tightening have led to a surge in Treasury yields since the start of this year. The yield on the 10-year note acts as a benchmark for mortgage rates.