US 30-year mortgage rate hits highest in nearly three years
Surge fuelled by growing worries over pressure from soaring oil prices and stronger economic growth.
The average 30-year fixed-rate mortgage in the United States surged to 7.49% in the week ending October 2, marking its highest level in nearly three years, according to the Mortgage Bankers Association. This increase occurred just four weeks before the U.S. midterm elections, which could determine whether President Donald Trump's Republican Party retains control of Congress.
The rise in mortgage rates is closely linked to the yield on U.S. 10-year Treasury notes, which had reached a 24-year high earlier in the week due to concerns over inflationary pressures from high oil prices and evidence of stronger economic growth in the United States. The cost of living is the most pressing issue for Americans as they contemplate their vote on November 3, with a Reuters/Ipsos poll revealing that it is a significant factor contributing to President Trump's record low approval rating of 32%.
Mortgage rates have increased by approximately 1.4 percentage points since the joint U.S.-Israeli strikes against Iran began in late February, coinciding with a similar rise in the 10-year Treasury yield, which surpassed 5.3% on October 5. Inflation rates have also been climbing, hitting 3.4% in August according to a measure that the Federal Reserve aims to keep at 2%.
Federal Reserve policymakers have indicated their intention to follow their September interest rate increase with another hike by the end of the year, although markets currently anticipate that such a move will not occur during their upcoming policy meeting at the end of October. Mortgage loan applications declined by 4.2% last week compared to the previous week, according to the Mortgage Bankers Association, with refinancing applications plummeting significantly.
Joel Kan, the deputy chief economist at the Mortgage Bankers Association, explained that "very few homeowners have an incentive to refinance at these rates, and the jump in borrowing costs has caused many potential buyers to step back from the purchase market."
Written by urgent.news from Straits Times Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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