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US mortgage rates climb to their highest level in 6 months -MBA




New townhouses are seen in a subdivision with other neighboring homes under construction in Tampa, Florida, United States on May 5, 2021. REUTERS / Octavio Jones

October 20 (Reuters) – Interest rates on America’s most popular type of home loan hit a six-month high last week, as global rates continued to rise amid high inflation and expectations according to which central banks will move further away from their easy money policies of the pandemic era.

The contract rate on a 30-year fixed-rate mortgage climbed to 3.23% in the week ending Oct. 15, from 3.18% the week before, the Mortgage Bankers Association reported on Wednesday in its report. weekly survey of US home loan market conditions. This is the highest level since the beginning of April and it is up more than a quarter of a percentage point since the end of July.

The rate hike helped push the overall volume of mortgage applications down 6.3% to the lowest since July, driven by a 7.1% drop in refinancing applications, the MBA said. Refinancing request volumes are also at their lowest since July, slightly above their lowest levels since early 2020.

Home purchase loan applications fell 4.9% to their lowest since early September.

Reuters Charts

“Purchasing activity has declined and was 12% lower than a year ago,” said Joel Kan, associate vice president of economic and industrial forecasting at the MBA. “Insufficient supply of housing and high growth in house prices continue to limit options for potential buyers.”

How quickly this situation is resolved remains the great unknown in the US residential real estate market. On Tuesday, the Commerce Department announced that U.S. housing construction fell unexpectedly in September and residential building permits fell to their lowest level in a year amid acute shortages of raw materials. and labor. Read more

Meanwhile, global interest rates continue to climb as central banks like the U.S. Federal Reserve signal that the days of crisis-era accommodation are drawing to a close as inflation rates reach their peak. high level for decades due to bottlenecks and labor shortages.

The Fed is expected to broadly announce at its next meeting in two weeks that it intends to start reducing its $ 120 billion per month purchases of US Treasuries and mortgage-backed securities as a first step towards policy normalization. .

The yield on the 10-year U.S. Treasury bill, the most influential benchmark in determining mortgage interest rates, reached its highest level since May on Wednesday and climbed nearly half a percentage point since the end of July.

Reporting by Dan Burns; Editing by Andrea Ricci

Our standards: Thomson Reuters Trust Principles.




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