Mortgage rates soar, business comes to a near standstill

On August 23, the Mortgage Bankers Association (MBA) released data showing that last week, interest rates on the most popular home loan in the US rose to their highest level in more than 20 years.

Business activity in the US has slowed sharply due to low consumer demand. (Source: Xinhua)

The average 30-year fixed mortgage rate rose 15 basis points to 7.31% in the week to August 18, its highest level since December 2000.

Rising government bond yields are believed to be one of the reasons why US home loan interest rates have risen to their highest level since the 2007-2009 financial crisis.

Treasury yields have risen this summer, while the stronger-than-expected strength of the US economy has led investors to adjust their forecasts for the Federal Reserve to keep policy rates high for longer.

The Fed has raised its policy interest rate from near zero in March 2022 to the current 5.25% - 5.50% to push back inflation.

* On the same day, according to the survey results of S&P Global, US manufacturing and business activities slowed down in August 2023, with the weakest growth since February, due to shrinking demand in the service sector.

The composite Purchasing Managers' Index (PMI) tracking manufacturing and services sectors fell to 50.4 in August 2023 from 52.0 in July, the biggest decline since November 2022.

Although August's index showed a seventh consecutive increase, the reading close to 50.0 suggests weakening demand for both manufactured goods and services.

Service sector business activity growth in August 2023 was just 51.0, the lowest level since February. Meanwhile, the manufacturing PMI fell for the fourth consecutive month, to 47.0 in August 2023, from 49.0 in July.

Consumer demand exerted a significant drag on business earnings, with new orders and business activity contracting across all sectors. New business activity in the services sector fell for the first time in six months to 49.2 in August, from 51.0 in the previous month.

Businesses in both the manufacturing and service sectors have curbed price increases to attract more customers and reduced hiring to offset rising input costs.

The near-halt in business activity in August is raising doubts about the strength of US economic growth in the third quarter of 2023, according to Chris Williamson, chief economist at S&P Global Market Intelligence.

Source: https://baoquocte.vn/my-lai-suat-cho-vay-the-chap-tang-vot-hoat-dong-kinh-doanh-gan-nhu-dinh-tre-239491.html