LIVE MARKETS-Mortgage rates gain heat, borrowers get cold feet

Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com

MORTGAGE RATES GAIN HEAT, BORROWERS GET COLD FEET

Home loan demand data from the Mortgage Bankers Association (MBA) was the only economic indicator to be found on Wednesday.

The upshot? The cost of financing home loans increased last week, enough to keep would-be borrowers on the sidelines.

The average 30-year fixed contract rate USMG=ECI gained 8 basis points to 6.24%.

As a result, demand for loans to purchase homes USMGPI=ECI - among the housing market's most forward-looking indicators - soured by a negligible 0.4%. But potential refi applications USMGR=ECI did the real damage, plunging 15.7%.

Refi accounted for 56.2% of all applications.

Combined, total mortgage demand tumbled by 8.5%.

"Mortgage rates increased for the first time in a month, and as expected, refinance applications fell,” said Joel Kan, MBA’s deputy chief economist. "With rates holding in the 6 percent range, the refinance market is likely to remain sensitive to week-to-week rate movements."

On the upside, Kan notes "the average loan size stayed at its highest level since September 2025, signaling that prospective homebuyers remain active at the start of 2026."

Despite last week's uptick, the 30-year fixed rate currently sits 78 basis points below where it was during the same week a year ago.

Over that same period, purchase applications have increased by 19.0%, while refi demand has shot up 155.7%.

While purchase applications are relatively forward-looking, it's still last week's data.

Housing stocks, on the other hand, reflect where investors expect the sector to be six months to a year in the future.

With that in mind, investors see very little home improvement in their crystal balls.

Stocks related to the housing market have fallen well behind the broader market.

Over the last 12 months, the S&P 1500 Homebuilding index .SPCOMHOME has gained 1.0%, while the PHLX Housing Sector index .HGX has slipped by 4.3%. During that time, the S&P 500 .SPX has advanced 12.4%.

(Stephen Culp)

EARLIER ON LIVE MARKETS:

S&P 500 BRIEFLY BREAKS 7,000 AS TECH CLIMBS; FED AHEAD CLICK HERE

FIFA WORLD CUP HYPE PUTS DIGITAL PLAYERS ON THE FRONT FOOT CLICK HERE

INDIA-EU TRADE PACT SEEN OFFERING LIMITED GAINS FOR EU EXPORTERS CLICK HERE

CHIP STOCKS SHOWING SOME FAT GAINS CLICK HERE

WHAT BUILDING A MINING SUPER-MAJOR TAKES CLICK HERE

SYMPATHY FOR THE DOLLAR CLICK HERE

EURO STRENGTH IS BACK, WHAT IT MEANS FOR EUROPE INC CLICK HERE

TECH UP, LUXURY DOWN CLICK HERE

BEFORE THE BELL: LOTS OF NEWS TO READ, START WITH ASML CLICK HERE

MORNING BID: TRUMP'S TALK DOWNS THE DOLLAR CLICK HERE