US Mortgage rates edge down to 6.51pc

WASHINGTON: US mortgage rates declined slightly last week, marking their first drop since the onset of the Iran war, but the marginal relief has done little to revive a housing market strained by high borrowing costs and expensive home prices.

According to the Mortgage Bankers Association (MBA), the average contract rate on a 30-year fixed mortgage fell by six basis points to 6.51 per cent for the week ending April 3, retreating from a seven-month high recorded the previous week.

Despite the dip in rates, demand remained subdued. Refinance applications dropped by 2.8 per cent, while applications for home purchases edged up by around 1 per cent compared to the previous week. However, purchase applications were still down 7 per cent compared to the same period last year.

Mortgage rates have surged by 42 basis points since February 28, when the United States and Israel launched strikes on Iran, pushing up yields on Treasury bonds that lenders use as a benchmark for setting mortgage rates.

The conflict has also added pressure on household budgets, as rising fuel prices increase the overall cost of living, further dampening buyers’ ability to afford homes.

Housing affordability remains a major concern for the administration of US President Donald Trump, which is reportedly preparing a “major housing announcement.” Earlier proposals included banning institutional investors from purchasing single-family homes and directing Fannie Mae and Freddie Mac to buy $200 billion worth of mortgage-backed securities to help bring down borrowing costs.