U.S. mortgage interest rates rise further, loan demand ebbs
(Reuters) - The average interest rate on the most popular U.S. home loan rose to its highest level since June 2009 last week and demand for mortgages ebbed as the impact of rising costs began to bite, Mortgage Bankers Association (MBA) data showed on Wednesday.
The average contract rate on a 30-year fixed-rate mortgage increased to 5.37% in the week ended April 22 from 5.20% a week earlier, the MBA survey showed.
It has risen 220 basis points from 12 months ago, with most of the rise since the turn of the year as financial markets have reacted to the U.S. Federal Reserve's plans to raise interest rates more swiftly to combat high inflation.
The central bank is expected to lift its benchmark interest rate by 50 basis points at its policy meeting next week, and to decide to start cutting its portfolio of $8.5 trillion of U.S. Treasuries and mortgage-backed securities - a stash of assets that had helped keep consumer borrowing costs, for mortgages in particular, low throughout the COVID-19 pandemic.
The housing market continues to give mixed signals, mostly because of near record low supply.
The Conference Board's consumer confidence index survey on Tuesday showed the number of consumers planning to buy a house climbed, despite soaring mortgage rates and record house prices. The median existing house price jumped 15% from a year earlier to an all-time high of $375,300 in March, the National Association of Realtors reported last week.
Still, mortgage applications declined last week for the second week in a row. The MBA said its Purchase Composite Index, a measure of all mortgage loan applications for purchase of a single family home, fell 7.6% on a seasonally adjusted basis, while the refinance index fell 9%.
(Reporting by Lindsay Dunsmuir; Editing by Andrew Heavens)