Published: Sun, October 14, 2018
Finance | By Loren Pratt

Mortgage rates hit 7-year high amid slowing housing market

Mortgage rates hit 7-year high amid slowing housing market

The cost for would-be homeowners to finance the purchase of a home or existing homeowners to refinance their current home continues to get more expensive as mortgage rates have surpassed the 5% interest threshold, causing mortgage application volume to fall last week by 1.7%, according to the Mortgage Bankers Association.

The Market Composite Index, a measure of mortgage loan application volume, fell 1.7% on a seasonally adjusted basis and slipped 2% on an unadjusted basis. A one-percentage-point rise in rates can cost a buyer hundreds of dollars a month, a shock for those who have gotten used to rates of 4% or less for years. The share of applications initiated with the Federal Housing Administration (FHA) increased to 10.5 percent, up 0.3 percent from the prior week.

The average fee on 30-year fixed-rate mortgages rose to 0.5 point from 0.4 point last week.

For mortgages of $453,100 or less, the average contract rate for 30-year fixed-rate mortgages hit 5.05% in the week that ended October 5. The United States Department of Agriculture (USDA) share of all mortgage applications also went up slightly, from 0.7 percent to 0.8 percent.

The average rate for a 15-year FRM was 4.29%, up from 4.15%.

Long-term USA mortgage rates leaped this week to their highest levels in seven years amid global anxiety over rising interest rates that has gripped financial markets.

"Rising rates paired with high and escalating home prices is putting downward pressure on purchase demand", says Sam Khater, chief economist at Freddie Mac.

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