The 10-year Treasury yield was at 4.65% in midday trading Thursday. The threat of higher rates for longer pushed Treasury yields last week to their highest levels in more than a decade. The central bank has already pulled its main interest rate to the highest level since 2001 in hopes of extinguishing high inflation, and it indicated last month it may cut rates by less next year than earlier expected. Treasurys and what the Fed does with interest rates can influence rates on home loans. Investors’ expectations for future inflation, global demand for U.S. Mortgage rates have been climbing along with the 10-year Treasury yield, which lenders use as a guide to pricing loans. “With mortgage rates well above 7%, some prospective homebuyers are turning to ARMs to lower their monthly payment in the short term amidst these high mortgage rates,” said Bob Broeksmit, the MBA’s CEO. However, there’s been a pickup in applications for adjustable-rate mortgages. Home loan purchase applications have fallen to multi-decade lows and are now nearly 20% below last year’s pace, according to the Mortgage Bankers Association. “Though buyers have shown signs of adjusting to the higher-rate environment, limited inventory has kept home prices elevated, cutting further into the buying power of shoppers hoping to find a suitable home,” said Hannah Jones, senior economic research analyst at. homes have fallen 21% through the first eight months of this year versus the same stretch in 2022. The elevated rates combined with a near-historic low level of homes for sale nationally has worsened homebuyers’ affordability crunch by keeping home prices near all-time highs even as sales of previously occupied U.S. This marks the first 12-month period that the benchmark mortgage rate has been at 6% or higher since the early 2000s. The average rate on a 30-year home loan climbed above 6% in September 2022 and has remained above that threshold since.
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