Quiver Quantitative - U.S. mortgage rates have surged to their highest point since the year 2000, causing potential homeowners to think twice about purchasing property. As reported by the Mortgage Bankers Association (MBA), the 30-year fixed mortgage rate witnessed a 14 basis points ascent, settling at 7.67% by the week ending October 6. This significant uptick indicates the fifth consecutive weekly surge in these rates.
Subsequently, the home-purchase applications index observed a marginal rise, yet it hovers near its lowest level in nearly 30 years. The composite measure of all mortgage applications, which encompasses refinancing activities, similarly showed a slight increment. Mortgage rates often follow the lead of the 10-year Treasury yields, which recently peaked at their highest since 2007. Nonetheless, these yields have since decreased, influenced by the growing sentiment that the Federal Reserve may have concluded its interest rate increases.
This spike in mortgage rates has led to many homeowners deferring any plans to relocate, especially if they had previously secured mortgages at more favorable rates. This reluctance further squeezes the housing supply, ensuring property prices remain high. Even as builders attempt to entice potential buyers with financial lures for new homes, sales of existing homes continue to suffer.
In a proactive move, the MBA, accompanied by two other housing-focused lobby groups, formally reached out to Fed Chair Jerome Powell earlier in the week. Their collective plea was for the central bank to avoid additional interest rate hikes, indicating the strain the housing industry currently faces.
This article was originally published on Quiver Quantitative