In a recent report by Bloomberg, it’s highlighted that US mortgage rates have surged to their highest level in five months, contributing to a decline in home-purchase applications for the fifth time within the last six weeks, as per data released by the Mortgage Bankers Association (MBA) on Wednesday.
According to the data, the contract rate on a 30-year fixed mortgage witnessed an increase of 11 basis points in the week ending April 19, soaring to 7.24 per cent—a pinnacle not seen since November 24.
The index monitoring mortgage applications for home purchases saw a downturn of 1 per cent.
Overall, the application index, encompassing both home purchases and refinancing, observed a 2.7 per cent decrease last week, with refinancing witnessing a substantial 5.6 per cent decline—the most significant drop since February.
The escalating borrowing costs, surpassing the 7 per cent mark, have led to a discernible discrepancy between the resale and new-home markets. Sales of previously-owned homes are grappling with challenges in garnering momentum as potential buyers adopt a wait-and-see approach in anticipation of lower interest rates, consequently constraining listings and propelling prices upward.
Nevertheless, amidst the constrained resale inventory, homebuilders have identified opportunities. Some firms are stimulating sales by offering more accessible financing alternatives and incentives. Consequently, new-home sales witnessed a robust resurgence last month, achieving their swiftest pace since September.
The MBA survey, a staple since 1990, collates responses from mortgage bankers, commercial banks, and thrifts, covering over 75 per cent of all retail residential mortgage applications in the United States.
