U.S. mortgage rates jumped above 7% 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% in the week ended Aug. 4, according to Mortgage Bankers Association data out Wednesday. 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 U.S. 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% of all retail residential mortgage applications in the U.S.
This article was provided by Bloomberg News.