US mortgage rates hit 16-year high

US mortgage rates hit 16-year high

(The Hill) — Mortgage rates hit a 16-year high last week, further dampening demand from homebuyers, according to data from the Association of Mortgage Bankers (MBA) released Wednesday.

The 30-year fixed mortgage rate rose to 6.75% in the last week of September, the highest reading since 2006. Mortgage rates have risen by 1.3 percentage points for the seventh straight week of increases.

Mortgage applications fell 14.2% from the previous week, according to the MBA, amid rising mortgage rates, stemming from the Federal Reserve’s continued rate hikes aimed at fighting inflation.

“The sharp rise in interest rates continues to halt refinancing activity and is also impacting purchase applications, which have fallen 37% on the back of last year’s pace,” Joel Kan, associate vice president of MBA economics and industry forecasts, said in a statement.

“There was also an impact from Hurricane Ian’s arrival in Florida last week, which prompted widespread closures and evacuations,” he added.

Mortgage rates have more than doubled over the past year, making monthly payments much more expensive.

Sky-high rates, combined with near-record house prices, are keeping potential buyers away from the housing market. Home sales slowed across much of the US after a prolonged housing boom during the pandemic. Analysts expect prices to fall in the coming months.

Federal Reserve Chair Jerome Powell recently told reporters that the US housing market will likely “have to go through a correction” to bring prices down to achievable levels.

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