US mortgage rates advanced last week to the highest level since 2000, keeping a lid on home-buying activity.
The contract rate on a 30-year fixed mortgage rose by 14 basis points to 7.67 per cent in the week ended October 6, according to Mortgage Bankers Association data out on October 11. That marked the fifth straight weekly increase.
The index of home-purchase applications inched up, though remains near the lowest level in almost three decades. The overall measure of mortgage applications, which includes refinancing activity, also edged higher.
Mortgage rates tend to move in tandem with 10-year Treasury yields, which last week hit the highest level since 2007. US yields have since retreated on expectations that the Federal Reserve is likely done raising interest rates.
With mortgage rates so high, many homeowners are hesitant to move, after locking in lower borrowing costs in the past. That’s taking a toll on supply and keeping prices elevated. And while builders are offering prospective buyers financial incentives to purchase new houses, existing-home sales remain depressed.
Earlier this week, the MBA and two other housing-industry lobby groups sent a letter to Fed Chair Jerome Powell urging central bankers to steer away from further interest-rate hikes.
The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data cover more than 75 per cent of all retail residential mortgage applications in the US.