U.S. mortgage rates rose for the 10th consecutive week, climbing above 7 percent last week to their highest level since 2001, according to data released Wednesday by the Mortgage Bankers Association (MBA).
The MBA’s weekly survey shows that the 30-year fixed mortgage rate rose to 7.16 percent, up from 6.94 percent a week earlier, while purchase applications dipped to their lowest level in seven years.
“Mortgage rates increased for the 10th consecutive week, with the 30-year fixed rate reaching 7.16 percent, the highest rate since 2001,” Joel Kan, the MBA’s vice president and deputy chief economist, said in a statement.
“The ongoing trend of rising mortgage rates continues to depress mortgage application activity, which remained at its slowest pace since 1997,” Kan added.
The share of adjustable-rate mortgage applications decreased slightly to 12.7 percent of total applications, while refinance activity increased to 28.8 percent of total applications from 28.3 percent the previous week.
“MBA’s forecast expects both economic and housing market weakness in 2023 to drive a 3 percent decline in purchase originations, while refinance volume is anticipated to decline by 24 percent,” Kan added.
Surging mortgage rates, fueled by aggressive interest rate hikes from the Federal Reserve to battle ongoing inflation, continue to dramatically cool the once red-hot housing market.
U.S. home prices saw a record slowdown in August, falling by 2.6 percent, according to the S&P CoreLogic Case-Shiller Index released Tuesday.
“The -2.6% difference between those two monthly rates of change is the largest deceleration in the history of the index (with July’s deceleration now ranking as the second largest),” Craig J. Lazzara, managing director at S&P Dow Jones Indices, said in a statement.
Lazzara predicted the slowdown will continue if interest rates continue to dampen affordability.
“As the Federal Reserve moves interest rates higher, mortgage financing becomes more expensive, and housing becomes less affordable,” Lazzara said. “Given the continuing prospects for a challenging macroeconomic environment, home prices may well continue to decelerate.”