Interest rates on 30-year fixed rate mortgages climbed to a six-month high this month, mirroring global interest-rate increases and reflecting rising inflation, according to Reuters.
What’s happening: “The contract rate on a 30-year fixed rate mortgage climbed to 3.23% in the week ended Oct. 15 from 3.18% the week before, the Mortgage Bankers Association reported on Wednesday in its weekly survey of conditions in the U.S. home lending market. That was the highest level since early April and is up by more than a quarter percentage point since the end of July.”
- Mortgage-application volumes dipped 6.3% to their lowest levels since July.
- Refinancing applications are similarly diminished.
Why: “Insufficient housing supply and elevated home-price growth continue to limit options for would-be buyers,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, told Reuters. “Purchase activity declined and was 12% lower than a year ago.”
- Meanwhile, central banks, such as the U.S. Federal Reserve, are indicating the end of “crisis-era accommodation” thanks to rising inflation caused by supply and labor shortages.
What’s next: The Fed is likely to announce plans at its next meeting to pull back on its purchases of $120 billion a month in U.S. Treasuries and mortgage-backed securities.