© Reuters. FILE PHOTO: A “For Rent, For Sale” sign is seen outside a home in Washington, U.S., July 7, 2022. REUTERS/Sarah Silbiger/File Photo
(Reuters) – The average interest rate on the most popular home loan in the US rose to its highest level since October 2008, Mortgage Bankers Association (MBA) data showed on Wednesday.
Rising mortgage rates are increasingly weighing on the rate-sensitive housing sector as the Federal Reserve pushes aggressively to raise borrowing costs to rein in high inflation.
The central bank will raise interest rates by three-quarters of a percentage point for the third time in a row late Wednesday.
Expectations of Fed tightening have sent Treasury yields soaring since the start of the year. The yield on the 10-year bond serves as the benchmark for mortgage rates.
The average contract rate on a 30-year fixed-rate mortgage rose 24 basis points to 6.25% in the week ending September 16, a level not seen since the close. financial crisis and the Great Recession.
MBA also said its Market Composite Index, a measure of mortgage applications, was up 3.8% from a week earlier, but still well below last year’s levels. Its refinance index was up 10.4% from the previous week but was down 82.7% from a year ago.