Mortgage rates hit a 16 year high last week, reducing demand among home purchasers, according to data from the Mortgage Bankers Association MBA on Wednesday.
The 30 year fixed mortgage rate increased to 6.75% in the last week of September, the highest level since 2006. Mortgage rates have gone up for seven weeks in a row, making it a 1.3% increase.
Mortgage applications decreased by 14.2%, reaching its lowest level since 1997, according to the MBA, as mortgage rates increased as a result of the Federal Reserve'sFederal Reserve's ongoing interest rate increases.
Mortgage rates have quadrupled over the past year, increasing the cost of monthly payments.
Joel Kan, MBA associate vice president of economic and industry forecasting said that the steep increase in rates has halted refinance activity and is also impacting purchase applications, which have fallen 37 percent behind last year s pace.
High interest rates and nearly record home prices are turning away potential buyers from the mortgage market. After a prolonged housing boom during the COVID-19 epidemic, home sales are declining nationwide.
The analysts predict a decline in home prices in the near future, along with Fed Chair Jerome Powell.
Powell told reporters that the U.S. housing market will likely have to go through a correction to bring prices down to attainable levels.