U.S. mortgage rates rose for the fourth consecutive week and had the biggest gain since May, reflecting the rise in Treasury yields.
The average 30-year fixed rate was at 7.49% in the week ended Oct. 5 from 7.31% last week, Freddie Mac said in a statement. It’s the highest level since December 2000. A year ago, the rate was at 6.66%.
AFP
“Mortgage rates maintained their upward trajectory as the 10-year Treasury yield, a key benchmark, climbed,” Freddie Mac’s Chief Economist Sam Khater said in the statement. “Several factors, including shifts in inflation, the job market and uncertainty around the Federal Reserve’s next move, are contributing to the highest mortgage rates in a generation. Unsurprisingly, this is pulling back homebuyer demand.”
Pending sales of homes in the U.S. dropped 7.1% in August as buyers delay purchases because of high mortgage rates. The index that follows the number of contracts signed before a home sale is closed fell to 71.8 in August from 77.3 in July, the National Association of Realtors said in a statement on Sept. 28. The index fell 19% from the same period last year. All four U.S. regions showed a drop in pending sales.
Mortgage rates tend to track the yield on 10-year US Treasuries, which reached a 16-year high earlier this week amid concerns that the U.S. central bank will have to keep its benchmark interest rate higher for a prolonged period to tame inflation.
The Fed maintained the rate in the range of 5.25% to 5.50% on Sept. 20, the highest level in 22 years, and some of its officials have publicly spoken in favor of an additional increase before the end of the year.
The core Personal Consumption Expenditure (PCE) index, which is closely followed by the Fed’s Federal Open Market Committee to decide on interest rates, rose 3.9% in the 12 months through August, from 4.3% in July. Despite the slowdown, the measure is still way above the Fed’s target annual inflation of 2%.
