As the Fed intensifies its fight against inflation, mortgage rates are reaching ever higher levels in the United States. The cost of loans stood at 6.75%, the highest in the last 16 years
Mortgage rates reached their highest level in 16 years at 6.75%. Rates accumulate their seventh consecutive weekly increase in the United States at the same time that the Federal Reserve intensifies its fight against inflation.
Data from the Mortgage Bankers Association (MBA) shows that the contract rate on a 30-year fixed mortgage rose nearly a quarter of a percentage point in the last week of September. This meant a drop of more than 14% in applications to buy or refinance a home.
In the last seven weeks, mortgage rates have shot up 1.30%. It is the largest increase in a comparable period since 2003 and reflects the vertiginous increase in borrowing costs as the Fed tightens its monetary policies, raising the base interest rate by 0.75% at its last meeting.
For its part, the index of applications for MBAs to buy a house plummeted from 12.6% to 174.10 points, the lowest level since 2015. The refinancing indicator fell 17.8% to a minimum of 22 years.
Other measures of mortgage rates such as Freddie Mac’s also put the cost of 30-year loans at 6.7%, the highest since 2007, in the week ending September 29.
The most frequently updated Mortgage News Daily put the 30-year mortgage rate at 6.65% on Tuesday, October 4.
The increase in mortgage rates has been dizzying. In the week ending September 9, the cost of borrowing had risen to 6.01% from 5.94% in the previous week. At that time that level had not been seen in 14 years.
High borrowing costs that strain long-term budgets, plus high prices related to low inventory and tight ability to pay a down payment have kept Latinos out of the real estate market.