(Bloomberg) -- 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, illustrating a battered housing market.
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.
The housing market has been bearing the brunt of aggressive interest-rate hikes by the Federal Reserve since early last year. More recently, bond yields have soared in anticipation that the Fed's policy rate will remain higher for longer amid a resilient economy.
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.
Higher mortgage rates and elevated home prices, due in part to limited supply, is contributing to one of the most unaffordable housing markets on record.
With a strong labor market still powering consumer spending, Fed officials have indicated they will keep interest rates elevated for the foreseeable future — and could well deliver another rate hike before year-end — in an effort to tame inflation for good.
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.
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