USA home loan rates increase

Applications for refinancing USA properties fell on the back of higher mortgage borrowing costs over the festive season, according to the Mortgage Bankers Association.

The MBA report that USA home loan applications fell 22.8% year-on-year during the week ending 25 December, before increasing by a mere 0.5% for the week ending 1 January.

The data shows that refinancing suffered the greatest fall – down 30.5% during the week ending 25 December.

The average interest rate for 30-year fixed-rate mortgages increased from 4.92% to 5.08% during the week ending 25 December, increasing further to 5.18% for the week ending 1 January.

The average interest rate for 15-year fixed-rate USA home loan increased from 4.34% to 4.57% during the week ending 25 December, and to 4.62% for the week ending 1 January.

Many experts expect USA property mortgage interest rates will continue to increase as the Federal Reserve winds up £700 trillion in ongoing purchases of mortgage-backed securities backed by Fannie Mae, Freddie Mac and Ginnie Mae by the end of March.

The MBA projects that 30-year fixed-rate USA home loans will reach as high as 6.2% by the fourth quarter of 2011.