|
The
Mortgage Bankers Association on Wednesday said its weekly
measure of the average contract rate on a 30-year fixed-rate
mortgage jumped to 3.52% in the week ended Jan. 7 from 3.33% a
week earlier. That was the largest weekly increase since March
2020 and pushed the prevailing rate to around where it was just
before the pandemic triggered a recession and drove borrowing
costs to historic lows when the Fed cut its benchmark rate to
near zero.
That era now appears to have passed, however. Mortgage rates had
been edging higher for the past several months, but the large
jump in rates last week followed the release of the minutes of
the Fed's December meeting. That readout showed the policymakers
were prepared to combat surging inflation with higher interest
rates and a likely reduction in the Fed's holdings of more than
$8 trillion of Treasuries and mortgage-backed securities.
That is crimping mortgage application volumes, especially for
loan refinancings, with rates now around half a percentage point
higher than where they were three months ago.
"Rates at these levels are quickly closing the door on refinance
opportunities for many borrowers. Although refinance activity
changed little over the week, applications remained at their
lowest level in over a month, and conventional refinance
applications were at their lowest level since January 2020,"
said Joel Kan, MBA’s Associate Vice President of Economic and
Industry Forecasting.
Overall loan application volumes rose 1.4% last week on the back
of a 2.2% increase in loans to buy a home, while refinancing
applications edged down by 0.1%.
(Reporting By Dan Burns; Editing by Chizu Nomiyama)
[© 2022 Thomson Reuters. All rights
reserved.]
This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.
|
|
