- The interest rate on the most popular U.S. home loan reached its highest level since September 2000, standing at a 7.9% average contract rate for a 30-year fixed-rate mortgage during the week ended October 20, marking the seventh consecutive weekly increase.
- This rise in mortgage rates has led to a significant drop in mortgage applications, which have reached a 28-year low, and the slowest weekly pace since 1995.
- The increase in mortgage rates has hindered prospective homebuyers and has had a suppressive effect on refinance activity.
- These rising mortgage rates have occurred even as the Federal Reserve paused its inflation-fighting rate hike campaign, which had previously seen benchmark rates increase from near-zero levels in March 2022 to 5.25-5.50% by July of the same year.
- The 30-year fixed-rate mortgage has seen an 81 basis point increase since the Fed’s rate hikes, tracking a similar rise in the yield on the 10-year Treasury note, which serves as the primary benchmark for longer-term U.S. borrowing rates.