US Mortgage rates surged to their highest point in five months, leading to a decline in home-purchase applications for the fifth time in the past six weeks, Bloomberg reported citing the Mortgage Bankers Association (MBA) data released on Wednesday.
According to data, the contract rate on a 30-year fixed mortgage rose by 11 basis points in the week ending April 19, reaching 7.24 per cent—the highest level since November 24.
The index tracking mortgage applications for home purchases dropped by 1 per cent.
Overall, the application index, which includes both home purchases and refinancing, decreased by 2.7 per cent last week, with refinancing experiencing a notable 5.6 per cent decline—the largest drop since February.
With borrowing costs surpassing 7 per cent, a notable disparity has emerged between the resale and new-home markets. Sales of previously-owned homes are facing challenges in gaining traction as potential buyers hold off in anticipation of lower interest rates, thereby limiting listings and driving up prices.
However, homebuilders have found opportunities amid the constrained resale inventory. Some companies are boosting sales by offering more affordable financing options and incentives. As a result, new-home sales experienced a robust rebound last month, achieving their quickest pace since September.
The MBA survey, conducted weekly since 1990, gathers responses from mortgage bankers, commercial banks, and thrifts, covering over 75 per cent of all retail residential mortgage applications in the United States.
