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The average interest rate on the most popular U.S. home loan climbed to a 12-year high last week with fewer homebuyers, data from Mortgage showed, suggesting the Federal Reserve’s goal of cooling the housing market may be starting to have an impact, the Bankers’ Performance Association (MBA) showed on Wednesday.

The average contract rate on a 30-year fixed-rate mortgage rose to 5.20% in the week ended April 15 from 5.13% a week earlier, the MBA survey showed. An increase of 2 percentage points over the previous year.

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Most of the rise, however, has come since the start of the year, leading to the fastest rise in household funding costs in decades, as the Federal Reserve abandoned its cautious approach to raising its benchmark overnight lending rate in favor of faster, more decisive steps to lower rates. Sustained high inflation.

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The central bank also decided at its next meeting on May 3 at 3:24 a.m. to begin shrinking its $8.5 trillion portfolio of U.S. Treasuries and mortgage-backed securities, assets that have contributed to the outbreak of the COVID-19 pandemic.

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Those expectations of Fed tightening sent Treasury yields higher as financial markets reacted. The yield on the US10YT=RR 10-year note, the benchmark for mortgage rates, is at its highest level since 2018.

After a slight drop in demand last week, a recent rise in home financing costs has led to a decline in mortgage applications as buyers look to lock in rates before they rise. MBA said its Purchase Correlation Index, a measure of all mortgage applications to purchase single-family homes, fell to a seasonally adjusted 254.0, while the Refinance Index fell 8%.

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