As the year came to an end, the US housing market was once again shivered by mortgage rates that reached their highest level since July. This occurred during the week of Christmas.
The surge in borrowing rates has slowed demand and sent home-purchase applications into a tailspin.
The cost of borrowing has risen sharply
Mortgage Bankers Association data released on Thursday showed that the 30-year contract rate had risen by 8 basis points, to 6.97%.
The previous week saw a dramatic increase of 14 basis points, indicating a steep rise in the cost of home loans.
This rapid rise is due to the increase in Treasury yields. These are themselves a result from the Federal Reserve’s projected more moderate rate of interest cuts for 2025.
Mortgage News Daily offers more frequent updates about home financing. By Tuesday that same week, the fixed 30-year rate was already at 7.07%.
The demand for goods and services is in a downward spiral
It was easy to see the impact of this escalating rate.
MBA index that tracks home-purchase applications dropped by almost 7% and reached its lowest level since mid November.
Simultaneously the refinancing indicator experienced an even greater drop. It fell by over 23%, hitting a new low.
These figures have been adjusted for seasonality, but the volatile nature of this market at the end of the year is a testament to its fragility.
Is there a silver lining in the darkness?
Some buyers seem to accept higher interest rates despite recent increases, possibly signalling a change in the market’s psychology.
The National Association of Realtors published separate data showing that contract signings to purchase previously owned homes in November reached their highest levels since February 2023, at a time when interest rates were averaging around 6.8%.
It suggests that you may be able to withstand fluctuations in interest rates.
Look at the data
Since 1990, the MBA Survey has been a staple in the mortgage market. Its data is derived from responses given by mortgage lenders, including mortgage banks, commercial bankers and thrifts.
This survey provides a thorough indicator of current market conditions, as it covers over 75% all residential retail mortgage applications made in the United States.
The post US Mortgage Rates Hit 6-Month Peak, Crushing Demand may be updated as new information unfolds.
