US mortgage rates jumped last week by the most since July 2023, abruptly halting a monthslong slide that was helping to reinvogorate housing activity.
The contract rate on a 30-year mortgage increased 22 basis points to 6.36% in the week ended Oct. 4, according to Mortgage Bankers Association data out Wednesday. The rate now stands at the highest level since August.
The group’s refinancing index sank 9.3%, the most since mid-August. A gauge of applications for home purchases ticked lower.
Mortgage rates tend to move in tandem with Treasury yields, which have been rising recently as last week’s strong US jobs report prompted traders to sharply reduce bets on aggressive Federal Reserve interest-rate cuts.
The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data cover more than 75% of all retail residential mortgage applications in the US.
Orphe Divounguy, senior economist at Zillow, blamed “stronger than anticipated employment and wage growth data. Last week’s strong jobs report caused yields and the mortgage rates that shadow them to rebound sharply. Wage growth remains robust. Wages are up nearly 4% year over year, ticking up slightly from 3.9% in August. Strong wage growth coupled with strong stock market growth and lower interest rates are a boon to household finances.
“In August, core inflation measured by the consumer price index accelerated, exceeding both the three-month and six-month averages. On a year-over-year basis, core prices are up 3.3%.”
“More stubborn core inflation would likely prevent further declines in long dated yields and mortgage rates. Expect more mortgage rate volatility as traders process the incoming data and change their forecasts for economic growth and the path of the fed funds rate.”
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