Mortgage rates reached their highest level last week since a previous recent peak in November as incoming economic data sends more “mixed signals,” according to a report released Wednesday by the Mortgage Bankers Association (MBA).
The average rate for the benchmark 30-year fixed rate mortgage hit 7.07 last week, up from 6.85 percent the week before, MBA’s data showed.
“Incoming economic data continue to send mixed signals about the economy, with the overall impact leaving Treasury yields higher last week as markets expect that the Federal Reserve will need to hold rates higher for longer to slow inflation,” said Joel Kan, MBA vice president and deputy chief economist, in a statement.
“All mortgage rates in our survey followed suit, with the 30-year fixed rate increasing to 7.07 percent, the highest level since November 2022,” Kan added.
Mortgage rates surged in the latter half of 2022, amid the Federal Reserve’s bout with inflation, which led to a series of interest rate hikes that impacted some of the most rate-sensitive markets, such as housing.
Average rates previously cooled to below 6 percent earlier this year before settling into what some economists are referring to as the new normal from around 6.5 to 7 percent.
The central bank held off on raising interest rates in its latest meeting to step back and observe the impact of its earlier string of hikes, and mortgage rates have climbed steadily since.
Yet data released Wednesday shows consumer prices rose only 0.2 percent in June, making it the smallest increase in inflation in two years.
And despite the latest jump in mortgage rates, the MBA’s data showed a small increase in applications last week.
“Purchase applications increased, but remained at a very low level and are 26 percent lower than the same week last year,” Kan continued. “The rise in purchase activity was driven by increases in both FHA and VA purchase applications.”
“The refinance index dropped to its lowest level since early June, as demand for rate/term and cash-out refinances remains extremely low with mortgage rates over 7 percent.”
The refinance share of mortgage activity dipped to 26.8 percent last week, down from 27.4 percent a week earlier.