The average interest rate on a 30-year fixed-rate US mortgage rose to 7.49% in the week ended October 2, its highest level since November 2023, adding to pressure on homebuyers facing higher borrowing costs.
The Mortgage Bankers Association said the rate increased by 19 basis points from the previous week. The rise follows a sharp increase in US Treasury yields, which strongly influence mortgage rates.
The benchmark 10-year Treasury yield climbed above 5.3% earlier this week, reaching its highest level in 24 years. Investors have been concerned about renewed inflationary pressure from higher oil prices, while stronger economic data has also reduced expectations for a rapid easing in monetary policy.
US inflation stood at 3.4% in August, well above the Federal Reserve’s 2% target. Policymakers have indicated that another interest-rate increase could come before the end of the year, although markets are currently not expecting a move at the Fed’s October meeting.
Higher mortgage rates are already weakening demand. Mortgage applications fell 4.2% last week, while refinancing activity dropped sharply. Total application volumes are now nearly 50% below their January level.
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