The average mortgage interest rate on U.S. mortgages has risen above 6.7%, the highest level since November 2022, according to data from the Mortgage Bankers Association (MBA).
Last week, the average interest rate for 30-year fixed-rate mortgages with conforming loan balances of $726,200 or less increased to 6.71% from 6.62% the previous week. The rise in mortgage interest rates is adjusted based on the 10-year US government bond yield, which serves as the reference rate for mortgage lending rates.
The increase in the average mortgage interest rate has continued, with the US Federal Reserve (Fed) hastening to raise interest rates to curb inflation. The latest rise in mortgage interest rates has sent home loan applicants down 6% last week, reaching a 28-year low and falling 44% compared to the same period last year.
Furthermore, the number of people applying for a refinance loan fell 6% last week and 74% lower than the same period last year.
The current rise in mortgage interest rates could have significant implications for the US housing market, which has been booming in recent years. Higher interest rates increase the cost of borrowing for homebuyers, which could discourage people from purchasing homes or lead to more demand for smaller, more affordable homes. However, the market has shown resilience in the face of such challenges, and it remains to be seen how the industry will fare in the coming months.