© Reuters. FILE PHOTO: A home under construction stands behind a “sold” sign during a new development in York County, South Carolina, U.S., February 29, 2020. REUTERS/Lucas Jackson/File Photo
(Reuters) – The average interest rate on America’s most popular home loan continued to rise last week and stayed at a more than three-year high, a survey showed on Wednesday, as the Federal Reserve reported signal that they will strongly tighten monetary policy to control inflation.
The Mortgage Bankers Association (MBA) said the average contract rate on a 30-year fixed-rate mortgage rose to 4.9% for the week ended April 1 from 4.8 % a week earlier, keeping mortgage rates at their highest level since December 2018.
Mortgage rates are now up nearly 1.6 percentage points since the start of the year, the fastest increase in home loan costs since 1994.
Home prices have risen about 35% since the outbreak of the COVID-19 pandemic, as the US central bank helped fuel the red-hot housing market by slashing interest rates to near zero, according to the Zillow Home Value Index. .
Last month, the Fed raised its benchmark overnight lending rate last month for the first time in more than three years and indicated rates will rise faster than previous financial market expectations, dampening demand. from home buyers.
Investors expect the Fed to raise the federal funds rate to 2.5%-2.75% later this year, up from the current target range of 0.25% to 0.5%.
The MBA said its Market Composite Index, a measure of mortgage applications, fell 6.3% on a seasonally adjusted basis to 398.5, its lowest level since March 2019.
The refinancing index also fell 9.9% to its lowest level since March 2019, the MBA said.
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