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The average interest rate on the most popular U.S. home loan climbed to a 12 year high last week and fewer homebuyers sought properties in a sign that the Federal Reserve's aim of cooling the housing market may be beginning to have an impact, data from the Mortgage Bankers Association (MBA) showed today, Reuters reported. The average contract rate on a 30-year fixed-rate mortgage increased to 5.20% in the week ended April 15 from 5.13% a week earlier, the MBA survey showed. It has risen 2 percentage points from one year ago. The bulk of the run up, however, has occurred since the start of the year, causing the fastest climb in home-financing costs in decades as the Fed abandoned a cautious approach to raising its benchmark overnight lending rate in favor of swifter and more decisive action to bring down persistently high inflation. The central bank is also set to decide at its next meeting on May 3-4 to begin reducing its portfolio of $8.5 trillion of U.S. Treasuries and mortgage-backed securities, a stash of assets that had helped keep consumer borrowing costs — for mortgages in particular — low throughout the COVID-19 pandemic.

Confidence among U.S. single-family homebuilders fell to a seven-month low in April as surging mortgage rates and snarled supply chains boosted housing costs, shutting out some first-time buyers from the market, a survey showed on Monday, Reuters reported. The housing market is under the spotlight as the Federal Reserve adopts an aggressive monetary policy stance in its fight against sky-high inflation, sending the 30-year fixed mortgage rate above 5% for first time in over a decade. But with housing inventory at record lows, the blow from surging borrowing costs could be modest. The National Association of Home Builders/Wells Fargo Housing Market index dropped two points to 77 this month. The fourth straight monthly decline pushed the index to its lowest level since last September. A reading above 50 indicates that more builders view conditions as good rather than poor. Homebuilding sentiment dropped to its lowest level in nearly two years in the Midwest. It also fell in the West, but rose in the Northeast and edged up in the densely populated South.

Small groups of neighborhood volunteers are blocking companies from buying single-family homes, rewriting homeownership rulebooks to thwart investor purchases of suburban housing, the Wall Street Journal reported. These groups, called homeowner associations, spend much of their time enforcing rules related to things such as lawn care and parking. But they often have broad powers to regulate how homes are used. Some of these associations now believe that the rise in home purchases by rental investors has led to a decline in property maintenance and made their neighborhoods less desirable. Investors are also making it more difficult for local families to buy houses, these groups say. Homeowner tactics include placing a cap on the number of homes that can be rented in a particular neighborhood, or requiring that rental tenants be approved by the association board. In most cases, associations need at least a two-thirds majority to pass these measures. Investor purchases have been rising in recent years and accounted for more than one in five home sales in December, according to housing research firm CoreLogic. Their effect on the housing market and local neighborhoods has become a hot-button issue across the country. Home prices have also risen at historically high rates during the pandemic, and would-be buyers say they have a hard time competing with companies that pay in cash. Some housing analysts say that blocking investors from neighborhoods could end up hurting renters, who are often less wealthy than their homeowner counterparts or who struggle to find affordable housing. “There’s a pretty deep and pervasive social stigma against renters,” said Jenny Schuetz, a senior fellow at the Brookings Institution.

U.S. mortgage rates rose to 5 percent for the first time in over a decade, raising the pressure on the housing market and adding another burden to home buyers who were already struggling with rising prices, the New York Times reported. Since the beginning of the year, interest rates on a 30-year fixed-rate mortgage have climbed from about 3 percent to 5 percent, the fastest jump since the 1980s, according to Freddie Mac. The rise has added hundreds of dollars a month to the typical house payment and comes on top of two years of blistering price increases in excess of 30 percent. Such a sudden jump in borrowing costs, in a market where buyers across the nation are already struggling to afford a home, would normally spell doom for home sales and housing prices. But in the unusual pandemic-recovery economy of rising wages, supply chain disruptions and enormous changes in how Americans live and work, it’s unclear how significant a difference higher rates will make. Economists generally believe rising rates will cool the market a little, at least compared with the past two years of double-digit price gains. Indeed, there are some early indications that expensive markets on the East and West Coast are already seeing a slight decline in buyer interest. The problem, in the housing market and the broader economy, is that there isn’t much to buy. The inventory of homes for sale remains extremely tight, with far more buyers than sellers. This means that even though rising rates will push many would-be homeowners out of the market or into a lower price range, there remains more demand than homes on the market.

A Colorado House of Representatives committee narrowly voted Wednesday to advance a bipartisan measure aimed at limiting homeowners associations’ powers to file foreclosure cases based on fines for community-rule violations, capping such penalties and increasing due process for homeowners, ProPublica.org reported. Colorado law allows HOAs to seek judicial foreclosure against homeowners who are at the equivalent of six months behind on their routine dues, also known as assessments. But that total can include other charges, such as fines, late fees and collection costs — including the HOA’s legal fees. As Rocky Mountain PBS and ProPublica reported last week, HOAs across the state have initiated more than 2,400 foreclosure cases — including those involving fines — from January 2018 through February 2022. Those cases continued during the pandemic, as HOAs were not subject to government moratoriums that prevented many mortgage lenders from foreclosing. House Bill 22-1137 would not stop HOAs from seeking to foreclose against homeowners who are behind on their routine assessments but would prohibit foreclosures in situations where the association’s lien against the home consists only of fines or the costs of collecting them. The proposal would also prevent HOAs from charging daily fines and would cap penalties at $500 per violation, the bill’s sponsors said.

Inflation soared over the past year at its fastest pace in more than 40 years, with costs for food, gasoline, housing and other necessities squeezing American consumers and wiping out the pay raises that many people have received, the Associated Press reported. The Labor Department said Tuesday that its consumer price index jumped 8.5% in March from 12 months earlier, the sharpest year-over-year increase since 1981. Prices have been driven up by bottlenecked supply chains, robust consumer demand and disruptions to global food and energy markets worsened by Russia’s war against Ukraine. From February to March, inflation rose 1.2%, the biggest month-to-month jump since 2005. Gasoline prices drove more than half that increase. Across the economy, the year-over-year price spikes were widespread. Gasoline prices rocketed 48% in the past 12 months. Used car prices have soared 35%, though they actually fell in February and March. Bedroom furniture is up 14.7%, men’s suits and coats 14.5%. Grocery prices have jumped 10%, including 18% increases for both bacon and oranges.

The Federal Housing Finance Agency on Wednesday directed servicers of Fannie Mae and Freddie Mac-backed loans to pause foreclosures for up to 60 days upon notification that borrowers have applied for Homeowner Assistance Fund money, National Mortgage News reported. “Today’s action will provide borrowers who need temporary mortgage assistance with additional time to be evaluated for relief,” said Sandra Thompson, acting director of the FHFA, in a press release. The move provides direction to servicers who have been trying to determine how best to juggle the phase-out of other types of federal housing relief at the same time that states, U.S. territories and tribal entities have been distributing the up to $9.96 billion available from the Treasury’s fund.

Better, the online mortgage lender that drew criticism for firing about 9% of its workforce via video conference call last year and made additional reductions last month, is planning to cut its staff further through a voluntary separation plan, Bloomberg News reported. The company is offering some of its corporate and product development and engineering employees as much as 60 days of severance pay and health insurance if they agree to depart, according to a person with knowledge of the plans. Employees under 40 years old will have seven days from receipt of the separation agreement to accept the offer, with their last day on April 15 and final payment on the same date, the person said. Those 40 and older will have 21 days to accept. Chief Executive Officer Vishal Garg sparked outrage for last year’s mass firing, then apologized and took a hiatus after clips of the incident went viral. A month ago, New York-based Better began firing roughly 3,000 employees in the U.S. and India — about 35% of its workforce — as rising interest rates weigh on the volume of new loans.