(Reuters) – The average interest rate on the most popular U.S. home loan has risen above 6% for the first time since 225 and is now more than double its level a year ago, Mortgage Data released by the Bankers Association (MBA) on Wednesday.
As the Federal Reserve aggressively raises borrowing costs to keep interest rates in check, rising mortgage rates are putting pressure on an interest-rate-sensitive real estate sector and high inflation. Since March, the central bank has raised the benchmark overnight lending rate by 225 basis points.
Expectations of Fed tightening caused Treasury yields to soar from the start of the year. 10 The yield on the annual note serves as a benchmark for mortgage rates.
Average contract rate for annual notes Annual fixed rate mortgages rose 7 basis points to 6.10% For the week ended September 9, a level not seen since the end of the financial crisis and Great Recession.
The MBA also said the market composite index, which measures mortgage application volume, was down 1.2% from a week ago and is now down from a year ago 64 .0%. Its refinancing index fell 4.2% from the previous week and 30.3% from a year ago.
Key inflation data on Tuesday was worse than expected, reinforcing that the Fed will be forced to raise interest rates for the third time in a row at its policy meeting next week
basis point expectations, in which investors now predict the central bank will have to raise rates faster and further than previously thought.
The impact of the rate hike is being felt across the real estate sector. New home sales fell to a 6-1/2-year low in July, while home resale and single-family housing starts were at two-year lows. But prices remain high amid a severe shortage of affordable housing, making it unlikely that the housing market will collapse.
