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The
average contract rate on a 30-year fixed-rate mortgage increased
to 5.20% in the week ended April 15 from 5.13% a week earlier,
the MBA survey showed. It has risen 2 percentage points from one
year ago.
The bulk of the run up, however, has occurred since the start of
the year, causing the fastest climb in home-financing costs in
decades as the Fed abandoned a cautious approach to raising its
benchmark overnight lending rate in favor of swifter and more
decisive action to bring down persistently high inflation.
The central bank is also set to decide at its next meeting on
May 3-4 to begin reducing its portfolio of $8.5 trillion of U.S.
Treasuries and mortgage-backed securities, a stash of assets
that had helped keep consumer borrowing costs - for mortgages in
particular - low throughout the COVID-19 pandemic.
Those expectations for Fed tightening actions have led to a
surge in Treasury yields as financial markets reacted. The yield
on the 10-year note US10YT=RR, which acts as a benchmark for
mortgage rates, is at its highest level since 2018.
The latest increase in home-financing costs also led to fewer
mortgage applications last week following a small bump in demand
the prior week as buyers rushed to lock in rates before they
moved higher. The MBA said its Purchase Composite Index, a
measure of all mortgage loan applications for purchase of a
single family home, fell 3.0% on a seasonally adjusted basis to
254.0, while the refinance index fell 8%.
(Reporting by Lindsay Dunsmuir Editing by Mark Potter)
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