US MORTGAGE rates jumped above 7 per cent in a week that government bond yields spiked following a surprise decision by Fitch Ratings to lower the nation’s credit rating.
The contract rate on a 30-year fixed mortgage rose by 16 basis points to 7.09 per cent in the week ended Aug 4, according to Mortgage Bankers Association data out on Wednesday (Aug 9). That’s the highest since November, and also dragged down the group’s measure of home-purchase applications to the lowest since February.
Mortgage rates are benchmarked to 10-year Treasury yields, and those hit the highest level of the year last week after Fitch stripped US government debt of its prized AAA rating. Borrowing costs also rose amid a bigger-than-expected boost in Treasury auctions and a strong private payrolls report.
The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data cover more than 75 per cent of all retail residential mortgage applications in the US. BLOOMBERG
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