US mortgage applications for both home purchases and refinancing dropped last week to the lowest levels since August, hobbled by a recent surge in mortgage rates.
Mortgage Bankers Association’s gauge of home purchases declined 5.1% in the week ended Oct. 18, marking the third straight decrease. The refinancing index retreated another 8.4% last week after slumping by the most since March 2020.
The contract rate on a 30-year fixed mortgage held at 6.52%, the data released Wednesday showed. A month ago, the rate stood at a two-year low of 6.13%.
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Mortgage rates have been moving up in concert with US Treasury yields on expectations Federal Reserve policymakers will be more prudent with interest-rate cuts as the economy proves resilient. Higher home financing costs, along with still-elevated asking prices, risk extending a more than year-long period of sluggish housing demand.
Yields on 10-year Treasury notes rose on Tuesday to 4.2%, the highest since late July and up from a 15-month low of 3.6% on Sept. 17 — one day before the Fed lowered borrowing costs by half a point.
The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data cover more than 75% of all retail residential mortgage applications in the US.
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