US 30-Year Mortgage Rate Hits 6.87%, a Two-Month High

US mortgage rates rose last week to a two-month high, reversing some of the momentum in the nation’s housing recovery. The contract rate on a 30-year fixed mortgage increased 7 basis points in the week ended Feb. 9 to 6.87%, the highest since early December, according to Mortgage Bankers Association data released Wednesday.

The rise in borrowing costs is unwelcome news for a resale market plagued by low inventory, with many homeowners already locked into low mortgage rates and unwilling to list their homes. The MBA’s index of applications for home-purchase mortgages fell 2.5% to 149.6, a five-week low. In January, the gauge reached the highest level since April, but has declined in each of the last three weeks.

Meantime, the MBA’s overall index for mortgage applications, which tracks both home purchases and refinancing, slipped 2.3% last week. The MBA’s index for refinancing fell 2.1%. Home buyers and sellers alike have been awaiting a sustained drop in mortgage rates, which have come down from their peaks near 8% in the fall, but are still double their levels from late 2021.

The Federal Reserve has signaled a willingness to cut rates this year, but inflation has been stubborn. Borrowing costs risk staying elevated until further progress is made bringing inflation closer to the Fed’s goal.

The MBA survey uses responses from mortgage bankers, commercial banks and thrifts and has been conducted weekly since 1990. The data cover more than 75% of all retail residential mortgage applications in the US.