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US mortgage rates continue steady rise

Adam Williams
Written By:
Adam Williams
Posted:
Updated:
20/05/2015

Mortgage rates in the United States continued their recent rise, with applications continuing to fall as a result.

Figures from the Mortgage Bankers Association showed the number of mortgage applications had fallen 1.5% week-on-week. This follows the trend of falling applications in recent weeks.

House purchase loans were worst hit, dropping 4% from their previous level.

Rising rates are said to be putting many borrowers off purchasing. The average 30-year fixed rate mortgage rate – the typical loan type in the US – increased to 4.04%, the highest level since December 2014.

“The drop this week may indicate borrowers being wary of the recent run up in mortgage rates,” said Mike Fratantoni, MBA’s chief economist.

Cash buyers were benefitting most from rising mortgage rates, with these buyers now accounting for 38% of the market. Remortgage applications were flat compared to previous levels.

“We’re likely to continue to see these mortgage rate swings as market participants try to anticipate Fed timing around rising short term interest rates,” said Len Kiefer, deputy chief economist at Freddie Mac.

“Unfortunately, prospective homebuyers may experience bouts of affordability shock in many housing markets. So far it’s been low mortgage rates that have helped to keep homebuyer affordability strong in the face of rising house prices, while income growth remains stagnant.”