Average long-term U.S. mortgage rates jumped by more than a quarter-point this week to their highest level since 2007 as the Federal Reserve intensified its effort to tamp down decades-high inflation and cool the economy.
Rising interest rates—in part a result of the Federal Reserve’s aggressive push to tamp down inflation—have cooled off a housing market that has been hot for years.
Families spent about 24% of their incomes on mortgage payments in the second quarter, up from 19% in the previous three months and from 17% last year.
Mortgage applications have declined sharply while sales of previously occupied homes have fallen for five straight months, during what is generally the busiest time of year in real estate.
Financial markets shuddered Thursday as they adjusted to the Federal Reserve’s latest attempts to address inflation.
Mortgage applications are down more than 15% from last year and refinancings are down more than 70%, according to the Mortgage Bankers Association.
The brisk jump in rates, along with a sharp increase in home prices, has been pushing potential homebuyers out of the market.
ARMs made up 13% of all home loans by dollar volume in March, their highest share since January 2020, according to CoreLogic.
Average long-term U.S. mortgage rates are continuing to rise, with interest on the key 30-year loan at its highest level since 2009.
Economists and investors foresee the fastest pace of Federal Reserve rate increases since 1989. The result could be much higher borrowing costs for households well into the future.
Meanwhile, mortgage applications fell again last week. The market composite index, a measure of total loan application volume, decreased 1.3% from a week earlier, according to Mortgage Bankers Association data.
The plan contains 21 steps to improve oversight and accountability, including a legislative proposal to modernize the governance structure of the appraisal industry.
With inflation raging at four-decade highs, economists and investors expect the central bank to enact the fastest pace of rate hikes since 2005. That would mean higher borrowing rates well into the future.
Costs for 30-year loans hit a more than two-year high of 3.69% last week, rising about 20% just since Christmas. Further increases are expected as the Federal Reserve, trying to curb inflation, hikes its benchmark rate.
The bank was accused in a lawsuit earlier this year of providing disproportionately fewer mortgages to Black borrowers, closing branches in predominantly Black neighborhoods and giving Black people less information during the mortgage-application process.
The Justice Department announced Friday a cross-government effort to investigate and prosecute redlining, the practice of banks discriminating against racial minorities or certain neighborhoods.
Congress approved $10 billion in federal assistance to help homeowners pay off debt, but the program is moving so slowly that protections are expiring before states have figured out how to distribute the money.
The White House replaced the regulator who oversees mortgage giants Fannie Mae and Freddie Mac after the Supreme Court ruled that the leadership structure of the Federal Housing Finance Agency was unconstitutional.
The chief executives of the nation’s largest banks went in front of Congress for a second day Thursday, facing questions ranging from inflation to their efforts to keep Americans in their homes after pandemic aid expires this summer.
The moratorium on foreclosures of federally guaranteed mortgages had been set to expire on March 31. Census Bureau figures show that almost 12% of homeowners with mortgages were late on their payments.
