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Homebuyer demand for mortgages eased last week as mortgage rates climbed to highs not seen in two decades — a trend that’s continued this week, even as the threat of a government shutdown looms.
The Mortgage Bankers Association’s weekly survey of lenders showed applications for purchase loans fell by a seasonally adjusted 2 percent last week when compared to a week earlier, the first drop since the week ending Sept. 1. Looking back a year, purchase loan applications were down 27 percent.
Although Federal Reserve policymakers voted not to raise short-term interest rates last week, they released projections indicating one more rate increase could be required to get inflation under control, followed by a longer period of higher rates than previously projected.
The Fed’s “higher for longer” rate strategy drove yields on long-term Treasurys higher, and mortgage rates followed, said MBA Deputy Chief Economist Joel Kan.
Joel Kan
“Mortgage rates moved to their highest levels in over 20 years as Treasury yields increased late last week,” Kan said in a statement. “The 30-year fixed mortgage rate increased to 7.41 percent, the highest rate since December 2000, and the 30-year fixed jumbo mortgage rate increased to 7.34 percent” — the highest since the MBA started tracking jumbo rates in 2011.
Both would-be homebuyers and homeowners continue to feel the impact of elevated rates, Kan said, with applications to refinance down 21 percent from a year ago because many homeowners have little incentive to refinance.
Mortgage rates edging back up
The Optimal Blue Mortgage Market indices, which were launched in 2017, show rates on…