US mortgage rates jumped to a 16-year high of 6.75 percent, marking the seventh-straight weekly increase and spurring the worst slump in home loan applications since the depths of the pandemic.
The contract rate on a 30-year fixed mortgage rose nearly a quarter percentage point in the last week of September, according to Mortgage Bankers Association data released Wednesday. The steady string of increases in mortgage rates resulted in a more than 14 percent slump last week in applications to purchase or refinance a home.
Over the past seven weeks, mortgage rates have soared 1.30 percentage points, the largest surge over a comparable period since 2003 and illustrating the abrupt upswing in borrowing costs as the Federal Reserve intensifies its inflation fight.
The effective 30-year fixed rate, which includes the effects of compounding, topped 7 percent in the period ended Sept. 30, also the highest since 2006.
MBA’s index of applications to purchase a home plummeted 12.6 percent to 174.1, the lowest level since 2015, while the gauge of refinancing dropped 17.8 percent to a 22-year low.
Prospective homebuyers may soon experience some respite in the rapid upturn in borrowing costs given the US 10-year Treasury yield has eased so far this week.
Other measures of mortgage rates also put the cost of borrowing around 6.7 percent. Last week, Freddie Mac’s data, which is released on Thursdays, showed that the average for a 30-year loan climbed to 6.7 percent, the highest since 2007, in the week ended Sept. 29. Mortgage News Daily, which updates more frequently, puts the 30-year rate at 6.65 percent on Tuesday.
The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks, and thrifts. The data covers more than 75 percent of all retail residential mortgage applications in the United States.