US mortgage rates jumped last week to the highest level of the year, leading to a sharp pullback in refinancing activity.
The contract rate on a 30-year mortgage rose 11 basis points to 6.30% in the week ended March 13 following a similar advance at the week before, according to Mortgage Bankers Association data released Wednesday. The combined two-week move was the largest since April.
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Rates on five-year adjustable mortgages soared nearly 40 basis points last week, the most since the start of 2024. The increase in home-financing costs coincides with a sharp rise in the 10-year US Treasury yield as the Iran war sparks concerns about greater inflation pressures.
Federal Reserve policymakers are widely expected to hold the line on interest rates at the conclusion of their two-day meeting later on Wednesday. Attention turns now to how officials view the oil-supply shock, which threatens not only higher inflation, but slower economic growth should the flow of oil from the Persian Gulf remain at a virtual standstill for an extended period.
The MBA's measure of refinancing applications slumped 18.5% on the week, the most this year. While the group's measure of purchase activity edged up for a third week, the recent increase in mortgage rates threatens a pullback in demand ahead of the crucial spring selling season.
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% of all retail residential mortgage applications in the US.
