U.S. Mortgage Interest Rates Top 5%, Buyers Look to Lock In Rates

• The average interest rate on the most popular U.S. home loan rose to more than 5% last week, the highest level since November 2018, and homebuyers hurried to make purchases before costs rose further, the latest weekly survey from the Mortgage Bankers Association (MBA) showed on Wednesday. 
• The average contract rate on a 30-year fixed-rate mortgage increased to 5.13% in the week ended April 8 from 4.90% a week earlier. It is up more than 1.5 percentage points since the start of the year as the Federal Reserve has begun to tighten financial conditions to cool demand in the economy amid high inflation. 
• Fed policymakers now anticipate a series of swift interest rate hikes until the end of this year at least as they seek to bring down inflation, after they raised the benchmark overnight lending rate last month for the first time in three years. Investors see the Fed bringing its federal funds rate to 2.5%-2.75% by the end of 2022, up from the current target range of between 0.25% and 0.5%. 
• Officials are also expected to start culling the central bank's portfolio of $8.5 trillion of U.S. Treasuries and mortgage-backed securities as early as next month, a stash of assets that had also helped keep consumer borrowing costs - for mortgages in particular - low throughout the COVID-19 pandemic. 
• The rise in borrowing costs, which has dampened demand for mortgage applications overall since the start of the year, caused a small bump in activity last week as homebuyers rushed to lock in rates before they move even higher.

(Source: Reuters)