US Mortgage Rates Hit 8-Month High, Cooling Housing Market

US mortgage rates have escalated for the fourth week in a row, reaching their highest level since August and negatively impacting both refinancing and home purchase activity. Data released on Wednesday indicated that the contract rate on a 30-year mortgage increased by 14 basis points to 6.57% in the week ending March 27. This surge represents the most substantial advance in nearly a year, with rates climbing almost half a percentage point over the last four weeks.

Consequently, the Mortgage Bankers Association reported a fall in mortgage applications for home purchases for the second consecutive week. A separate measure for refinancing applications also experienced a significant decline, tumbling by 17.3%. These rising mortgage rates are closely linked to US Treasury yields and have been influenced by concerns over potential inflation stemming from the ongoing conflict in Iran. The supportive effect of lower borrowing costs earlier in the year has now largely vanished for the struggling housing market.