© 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 U.S. home mortgage rose to its highest level since October 2008, data from the Mortgage Bankers Association (MBA) showed on Wednesday.
Rising mortgage rates are weighing on the interest-bearing housing sector as the Federal Reserve moves to raise borrowing costs sharply to combat high inflation.
The central bank is set to raise interest rates by three-quarters of a percentage point for the third straight time later on Wednesday.
Expectations for Fed tightening led to a rise in Treasury yields earlier this year. The yield on the 10-year note is used as a benchmark for mortgage rates.
The average contract rate on a 30-year fixed-rate mortgage fell 24 basis points to 6.25% for the week ended Sept. 16, a level not seen since the end of the financial crisis and the Great Recession.
MBA also said the market composite index, a measure of mortgage loan application volume, was up 3.8 percent from a week earlier, but remained well below last year. The balance sheet index jumped 10.4 percent from last week but fell 82.7 percent from a year ago.