Mortgage rates jump to 9-month high after US debt downgrade
Serhant Associate Broker Nile Lundgren weighs in on the middle-class getting priced out of home ownership.
U.S. mortgage rates soared to the highest level in nine months this week following the surprise decision by Fitch Ratings to downgrade the nation's credit score.
The Mortgage Bankers Association reported Wednesday that the average rate on the 30-year loan climbed to 7.09% from 6.93% the previous week, the highest level since November 2022.
«Treasury yields rates rose last week and mortgage rates followed suit, due to a combination of the Treasury’s funding announcement and the downgrading of the U.S. government debt rating,» said Joel Kan, MBA's deputy chief economist. «Rates increased for all loan types in our survey.»
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The interest rate-sensitive housing market has cooled rapidly in the wake of the Federal Reserve's aggressive tightening campaign. (David Paul Morris/Bloomberg via / Getty Images)
The steeper rates weighed heavily on mortgage demand, with a key measure of home-purchase applications tumbling 3.1% last week to the lowest level since February.
Demand for refinancing also continued to decline last week, sliding another 4%, according to the survey. Compared with the same time last year, refinance applications are down a stunning 37%.
«Not surprisingly, mortgage applications continued to decline given these higher rates, with overall application counts falling for the third consecutive week, as both purchase and refinance activity declined,» Kan said.
The interest rate-sensitive housing market has cooled rapidly in the wake of the Federal Reserve's aggressive tightening campaign. Policymakers already lifted the benchmark federal funds
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