(Reuters) – The average interest rate on the most popular U.S. home loan remained last week at its highest level since November as stronger-than-expected readings on inflation, job gains and consumer spending caused investors to hike their bets that the Federal Reserve will have to keep raising its policy rate through the summer.
The average contract rate on a 30-year fixed-rate mortgage increased by 9 basis points to 6.71% for the week ended Feb. 24, data from the Mortgage Bankers Association (MBA) showed on Wednesday, a third weekly rise in mortgage rates after several weeks of declines.
That rate has risen more than 50 basis points over the past month. The yield on the 10-year Treasury note acts as a benchmark for mortgage rates.
Mortgage rates soared to more than 7% last October as the U.S. central bank raised its benchmark policy rate in 2022 at the fastest pace in 40 years, but began to ebb after signs late last year that inflation was on the wane. The interest rate-sensitive housing sector has borne the brunt of the Fed’s actions.
The rise in mortgage rates meant fewer would-be purchasers. The MBA’s Market Composite Index, a measure of overall mortgage loan application volume, fell 5.7% from a week earlier. The MBA’s Purchase Composite Index, a measure of all mortgage loan applications for purchase of a single family home, declined 5.6% from the prior week.
(Reporting by Lindsay Dunsmuir; Editing by Bernadette Baum)
