US mortgage rates jump by most in nearly a year

US mortgage rates jumped by the most in nearly a year last week to their highest level since July on the heels of a surge in Treasury bond yields, which are moving up on expectations of an economic rebound in the months ahead as coronavirus vaccines reach a larger share of Americans.

The contract rate on a 30-year fixed-rate mortgage, the most popular US home loan, rose by 0.15 percentage point to 3.23% in the week ended Feb. 26, the Mortgage Bankers Association said on Wednesday.

That was the largest weekly increase since last March and marks the fourth straight weekly rise in borrowing costs. With the increase, mortgage rates have risen 0.37 percentage point from their record low of 2.86% early this year.

The MBA said its weekly index of mortgage applications rose 0.5% to 794.5, its first increase in four weeks.

"The housing market is entering the busy spring buying season with strong demand," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Purchase applications increased, with a rise in government applications - likely first-time buyers - pulling down the average loan size for the first time in six weeks."

The housing market has been one of the persistent bright spots throughout the pandemic-induced recession, now a year old. But much of the strength has come from historically low interest rates, and economists had worried the rapid rise in Treasury yields in the last several weeks risked choking off that activity.

The 10-year US Treasury note yield, which heavily influences mortgage rates, has risen by roughly half a percentage point since early January to around 1.4%.