According to data released on Wednesday by the Mortgage Bankers Association (MBA), the average interest rate on the most common home loan in the United States increased to its highest level since October 2008.
As the Federal Reserve continues to aggressively raise borrowing costs in an effort to control high inflation, rising mortgage rates are having an increasingly negative impact on the interest rate-sensitive housing sector.
Later on Wednesday, the central bank is expected to increase interest rates by 0.75% for the third consecutive time.
Since the beginning of this year, Treasury yields have increased due to anticipation of Fed tightening. The benchmark for mortgage rates is the yield on the 10-year note.
For the week ending September 16, the average contract rate for a 30-year fixed-rate mortgage increased by 24 basis points to 6.25%, a level that had not been reached since the Great Recession’s and financial crisis’s tail end.
The MBA also reported that its Market Composite Index, a gauge of the volume of mortgage loan applications, increased by 3.8 percent from a week earlier but still lagged far behind levels from a year ago. Its Refinance Index increased 10.4% from the previous week but decreased 82.7% from a year ago.