Rising rates knock U.S. mortgage activity to lowest
since 2014: MBA
Send a link to a friend
[October 18, 2018]
By Richard Leong
(Reuters) - U.S. consumers filed the fewest
requests for a mortgage since late 2014 last week as most home borrowing
costs reached their highest levels in more than seven years, the
Mortgage Bankers Association said on Wednesday.
Loan applications for home refinancing tumbled to their lowest level
since late 2000, while mortgage requests to buy a home dropped to their
weakest level in 20 months, MBA data showed.
The Washington-based group's seasonally adjusted index on mortgage
applications fell 7.1 percent to 322.1 in the week ended Oct. 12. This
was the lowest reading since 296.9 set in the Dec. 26, 2014 week. It
also marked the steepest weekly decline in about 13 months.
The latest figures did not include adjustments for the Columbus Day
holiday last Monday, MBA said.
The jump in mortgage rates is another headwind for the housing sector
that is already struggling with lean inventory and rising building
Interest rates on 30-year conforming mortgages, whose balances are
$453,100 or less, on average climbed 0.05 percentage point to 5.10
percent, which was the highest level since February 2011.
Home borrowing costs rose in step with a dramatic selloff in the U.S.
bond market, which propelled the yield on benchmark 10-year Treasury
notes to 3.261 percent last Tuesday which was its highest in 7-1/2
[to top of second column]
A home is seen in the Penn Estates development where most of the
homeowners are underwater on their mortgages in East Straudsburg,
Pennsylvania, U.S., June 20, 2018. Picture taken June 20, 2018.
Investors had dumped bonds on worries about rising inflation and a faster pace
of rate increases from the Federal Reserve prompted by robust economic data.
Bond yields have retreated on safe-haven demand for bonds spurred by sharp
losses in global equity markets. The 10-year yield was about 3.15 percent early
The average interest rate on 30-year home loans backed by the Federal Housing
Administration, often used by first-time home-buyers and borrowers with patchy
credit, increased to 4.50 percent, the highest since February 2011.
Interest rates on 15-year fixed-rate and five-year adjustable-rate mortgages
averaged 4.50 percent and 4.34 percent, respectively, to their highest readings
in over seven years, MBA data showed.
However, the average rate on jumbo mortgages, or loans with balances greater
than $453,100, dipped to 4.98 percent from 4.99 percent.
MBA's seasonally-adjusted barometer on loan requests to buy a home fell 5.9
percent to 224.0, the lowest level since February 2017.
The group's seasonally-adjusted gauge on applications for mortgage refinancing
dropped 9.0 percent to 838.1, the lowest since December 2000. Its weekly decline
was the largest since July 2017.
(Reporting by Richard Leong; Editing by Susan Thomas)
[© 2018 Thomson Reuters. All rights
Copyright 2018 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.