U.S. mortgage rates remained high before the start of a new week, with 30-year fixed-rate mortgage quotes approaching 7%. The main driving forces behind this are the rise in U.S. Treasury yields and stronger employment data in August, which have led the market to re-evaluate the policy direction of the Federal Reserve's September meeting.
30-year mortgage rates continue to rise
The latest daily data shows that the average interest rate for 30-year fixed-rate mortgages for high-quality borrowers was 6.89% on September 4th, up by 1 basis point from the previous day and approaching the previously reached level of 6.91%. The interest rate for 15-year fixed-rate mortgages was 6.49%, while the interest rate for larger mortgages reached 7.06%.
According to the weekly data from the Mortgage Bankers Association of America, the 30-year contract interest rate is reported at 6.79%, which is also a slight increase from the previous value. Over the past year, mortgage rates fell to around 6% in March of this year, only to rebound significantly thereafter.
10-year U.S. Treasury bonds continue to face pressure
The core pressure on mortgage rates still comes from the bond market. In the United States, mortgage pricing is more directly influenced by the yield of Treasury bonds and the market for mortgage-backed securities, rather than moving in sync with the Federal Reserve's overnight policy rate.
The yield on 10-year U.S. Treasury bonds closed at around 4.79% last Friday, and at one point during the session it rose to around 4.81%. If long-term yields remain in the range of 4.7% to 4.8%, it is unlikely that 30-year mortgage rates will see a sustained decline in the short term.
Employment and inflation become the next focus
Data from the U.S. Bureau of Labor Statistics shows that in August, there were 162,000 new non-farm jobs created, and the unemployment rate remained at 4.1%. Following the release of the data, U.S. Treasury yields rose, and market expectations for a interest rate hike by the Federal Reserve at its September meeting also increased.
Reuters, citing futures market pricing, reported that after trading closed on Friday last week, the market estimated a 57% probability of an interest rate hike in September. The upcoming releases for August PPI and CPI this week will become key data for determining the direction of interest rates next. If inflation continues to be strong, the 30-year mortgage rate may more firmly approach or even exceed 7%.
Mortgage applications still show resilience
Despite rising financing costs, the demand for loans has not completely disappeared. Data from the Mortgage Bankers Association of America shows that as of the week ending August 28, the total number of mortgage applications increased by 0.8% month-on-month, with applications for purchasing homes increasing by 2% and refinancing applications decreasing by 1%, still 19% lower than the same period last year.
