US Mortgage Rates Surge Above 7%

US Mortgage Rates Surge Above 7%

US mortgage rates recently surged above 7%, marking the first time since early December and posing challenges to the housing market’s budding recovery. According to the Mortgage Bankers Association (MBA), the contract rate on a 30-year fixed mortgage rose by 19 basis points in the week ending February 16, reaching 7.06%, the most substantial weekly increase since October.

This spike in rates has had an immediate impact, with the MBA’s index of applications for home-purchase mortgages dropping over 10% to its lowest level since November. This decline has been a consistent trend over the past four weeks, reflecting the market’s sensitivity to interest rate changes.

While current rates are lower than the highest levels seen in recent times, they remain significantly higher than those of 2021. The housing market has been closely watching the Federal Reserve for any signs of interest rate reductions, but officials have indicated a cautious approach. Moving forward, the trajectory of inflation and the strength of the labor market will be critical factors in determining the future direction of mortgage rates.

In addition to the decline in home-purchase mortgage applications, the MBA’s overall index for mortgage applications, which includes both home purchases and refinancing, dropped by 10.6% last week, hitting its lowest level of the year. The index for refinancing also saw a decline, reflecting the broader impact of rising mortgage rates on the housing market.

The MBA’s survey, which gathers data from mortgage bankers, commercial banks, and thrifts, provides a comprehensive view of the residential mortgage market. Covering more than 75% of all retail residential mortgage applications in the US, the survey offers valuable insights into the trends and dynamics shaping the housing market.

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