US mortgage rates soar to highest in over 23 years

The interest rate on the most popular US home loan last week jumped to the highest since September 2000, marking its seventh straight weekly increase and driving mortgage applications to a 28-year low, a survey showed on Wednesday.

The 7.9 per cent average contract rate for a 30-year fixed-rate mortgage during the week ended October 20 was up 20 basis points from the prior week, the Mortgage Bankers Association said.

"Mortgage activity continued to stall, with applications dipping to the slowest weekly pace since 1995," MBA vice president and deputy chief economist Joel Kan said. "These higher mortgage rates are keeping prospective homebuyers out of the market and continue to suppress refinance activity."

The cost of borrowing to buy a house has risen even as the Federal Reserve has put its inflation-fighting rate-hike campaign on pause, after lifting its benchmark policy rate from near zero in March 2022 to 5.25-5.50 per cent in July of this year.

The 30-year fixed rate mortgage is up 81 basis points since then, tracking a similar rise in the yield on the 10-year Treasury note, the main benchmark for longer-term US borrowing rates.