US fixed 30-year mortgage rate jumps to 7.12%, MBA says

Sept 23 (Reuters) - The rate on the most popular US home loan rose last week to its highest ‌in more than two years, after the Federal Reserve lifted ‌short-term interest rates to combat inflation, and rising oil prices drove up Treasury yields ​that underpin residential borrowing costs.

The average 30-year fixed-rate mortgage jumped 15 basis points to 7.12% in the week ended September 18, the Mortgage Bankers Association said on Wednesday. It was last higher in May 2024.

Mortgage rates ‌have risen more than ⁠a full percentage point since joint US-Israeli strikes against Iran began pushing up the global price of oil ⁠in late February, putting the squeeze on prospective homebuyers and a chill into the US housing market.

Mortgage rates track US Treasury yields, which are ​sensitive to ​oil prices and the threat they ​pose to inflation, which has ‌been running above the Fed's 2% goal for 5-1/2 years.

Last week the Fed increased its policy rate by a quarter of a percentage point to the 3.75%-4.00% range to put inflation on a "timelier" path to 2%, and nearly all Fed policymakers projected at least one more ‌rate increase by the end of ​this year. Traders are also betting on ​further Fed rate hikes.

The rise ​in mortgage rates last week led to a decline ‌in refinancing and home purchase ​applications, the MBA said, ​and drove more borrowers into adjustable-rate mortgages, which offer lower upfront borrowing costs than fixed-rate mortgages and reset after a number of ​years to whatever ‌the going rate is at the time. ARMs accounted for ​9.8% of mortgage applications last week, the MBA said.

(Reporting by ​Ann Saphir; Editing by Chris Reese)