By Amina Niasse
NEW YORK (Reuters) - U.S. mortgage interest rates rose to the highest since November 2000 last week, helping to drive home loan application volumes to the lowest in 27 years, a report on Wednesday said.
The average weekly rate on a 30-year fixed mortgage hit 7.53% in the week ended Sept. 29 from the week prior's 7.41%, according to data released by the Mortgage Bankers Association (MBA). The increased rate was accompanied by a 6% fall in home loan applications.
“Mortgage rates continued to move higher last week as markets digested the recent upswing in Treasury yields," said Joel Kan, the MBA's vice president and deputy chief economist. “As a result, mortgage applications ground to a halt, dropping to the lowest level since 1996."
Yields on the 10-year Treasury note, which is the main benchmark for determining mortgage rates, have climbed to their highest since the global financial crisis, hitting 4.8% this week.
Moreover, the spread between 10-year note yields and 30-year mortgage rates are near record-wide levels, which has also exacerbated the rise in borrowing costs for prospective homebuyers. After the Federal Reserve launched its aggressive rate hike campaign in March 2022, the spread has progressively widened, and currently stands around 3 percentage points.
Last week also marked the fourth consecutive week that mortgage rates rose. The share of activity for adjustable-rate mortgages rose to 8% - the highest since March - from 7.5% a week earlier as buyers searched for affordable payment options, Kan said. ARMs typically have a lower introductory rate but then reset after a period.