US mortgage rates climbed to a four-month high last week, potentially signaling a bumpier recovery for the residential real estate market.
The contract rate on a 30-year fixed mortgage rose 12 basis points to 7.13% in the week ended April 12, according to Mortgage Bankers Association data released Wednesday. The effective rate, which includes fees and compound interest, increased to 7.32%.
Despite the pickup in borrowing costs, purchase activity stabilized last week. The group’s index of mortgage applications for home purchases increased 5%, representing just the first gain in five weeks.
Mortgage rates are at risk of rising further based on the 10-year Treasury yield that now stands at the highest since November. Mortgage News Daily, which updates more frequently, put the 30-year fixed rate at 7.5% on Tuesday.
Federal Reserve Chair Jerome Powell said Tuesday that the latest US inflation readings indicate that it will take longer for the central bank to attain the confidence needed to lower its benchmark interest rate.
Read more: Powell Signals Delay in Rate Cuts Due to Persistent Inflation
That will probably keep mortgage rates elevated and temper housing demand. After rising to a more than one-year high in July, new-home sales have since cooled, and contract signings on previously owned houses remain depressed by limited inventory and high prices.
MBA’s overall index of applications, which includes those for home purchases and refinancing, rose 3.3% last week. The refinancing gauge edged higher.
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% of all retail residential mortgage applications in the US.
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