US Mortgage Applications Rise First Time in Two Months Ahead of Federal Reserve Expected to Raise Rates 50bps

The Mortgage Bankers Association showed mortgage applications in the US rose for the first time in 8 weeks. The 30-year mortgage rate has been moderating as yields stall somewhat ahead of the FOMC with higher house prices in general. The Federal Reserve is expected to rewind to May 2000 today, when “inflationary imbalances,” saw the Fed led by Alan Greenspan raise interest e rates by 0.50% to a target of 6.5%. That was the last time the Fed would ever raise interest rates by that much in one move.

mortgage applicaition

Mortgage Bankers Association for the week ending 29 April 2022

  • US MBA mortgage applications w.e. 29 April +2.5% vs -8.3% prior
  • Market index 351.8 vs 343.1 prior
  • Purchase index 244.4 vs 234.7 prior
  • Refinancing index 932.3 vs 930.7 prior
  • 30-year mortgage rate 5.36% vs 5.37% prior
US MBA Mortgage Applications

This year’s surge in mortgage rates was hardly unforeseen, given the record lows reached in the pandemic period and concerns about high U.S. inflation readings, but it has unfolded faster than many expected. At the beginning of the year, the average rate on America’s most popular home loan was 3.22%. 

  • Freddie Mac 30-year fixed mortgage rates rose another 11 bps to 5.11%, the high back to December 2009 (up 214bps y-o-y).
  • Fifteen-year rates surged 21 bps to 4.38% – the high since April 2010 (up 209bps).
  • Five-year hybrid ARM rates gained six bps to 3.75% (up 92bps).
  • Bankrate’s survey of jumbo mortgage borrowing costs had 30-year fixed rates up 22 bps to a more than decade-high 5.23% (up 216bps).

Higher mortgage rates typically slow home-buying activity, but the number of applications. Expectations that the Federal Reserve will raise interest rates several more times this year to control inflation are driving up mortgage rates. Home prices continue to push homeownership out of the question for many Americans.

Rising rates are reducing home-loan refinancings, which powered much of the mortgage market’s boom in 2020 and 2021. About four million Refinancings were expected to make up 33% of mortgage originations this year, down from 59% in 2021, according to the Mortgage Bankers Association.

source: Mortgage Bankers Association of America

From The TradersCommunity News Desk