US mortgage rates last week topped 7.5% for the first since November 2000 and applications for home purchases tumbled to a multi-decade low, as expectations of higher interest rates dented the housing market.
The 30-year fixed-rate mortgage increased to 7.53% in the week ended September 29, the Mortgage Bankers Association said on Wednesday.
That is the highest level since November 2000 and marks the ninth consecutive week rates have exceeded 7%.
“Mortgage rates continued to move higher last week as markets digested the recent upswing in Treasury yields”, said MBA’s deputy chief economist Joel Kan. “As a result, mortgage applications ground to a halt, dropping to the lowest level since 1996”, falling 6% from the prior week.
Yields on longer-term US Treasuries have surged recently as investors adjust to the expectation the Federal Reserve will keep rates higher for longer.
The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data cover more than 75% of all retail residential mortgage applications in the US.
The contract rate on a 30-year fixed mortgage rose by 12 basis points, the most since mid-August, to 7.53% in the week ended Sept. 29, according to Mortgage Bankers Association data out Wednesday. The index of home-purchase applications fell 5.7% to 136.6, the lowest level since 1995.
The overall measure of mortgage applications, which includes refinancing activity, slid 6% to its weakest reading since 1996.
Borrowing costs have continued to rise so far this week, and Mortgage News Daily, which updates more frequently, put the 30-year fixed mortgage rate at 7.72% on Tuesday.