US mortgage interest rates top 5%, buyers look to lock in rates
The average interest rate on America’s most popular home loan hit more than 5% last week, the highest level since November 2018, and buyers rushed to make purchases before costs rose further , according to the latest Mortgage Bankers Association (MBA) weekly survey. shown on Wednesday.
The average contract rate on a 30-year fixed-rate mortgage rose to 5.13% in the week ended April 8, from 4.90% a week earlier. It has risen more than 1.5 percentage points since the start of the year as the Federal Reserve began to tighten financial conditions to cool demand in the economy amid high inflation.
Fed policymakers are now forecasting a series of rapid interest rate hikes through at least the end of this year as they seek to bring inflation down, after raising the overnight rate on last month for the first time in three years.
Investors see the Fed raising its federal funds rate to 2.5%-2.75% by the end of 2022, up from the current target range of 0.25%-0.5%.
Rising borrowing costs, which have dampened demand for mortgage applications globally since the start of the year, prompted an uptick in activity last week as homebuyers rushed to block mortgages. rates before they climb even higher.
The MBA said its composite purchase index, a measure of all mortgage applications for the purchase of a single-family home, rose 1.4% on a seasonally adjusted basis to 261.8, while the refinancing index fell 4.9%.
The MBA’s latest economic forecast was also released on Wednesday, with mortgage lending down 35.5% in 2022 from a year earlier to $2.58 trillion.
However, purchase origins continue to grow and are expected to rise 4% from last year to a record high of $1.72 trillion in 2022.
(Reporting by Lindsay Dunsmuir; Editing by Mark Potter)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)