The U.S. housing sector continues to bear the impact of rising mortgage interest rates which have hit their highest level since 2006, the Mortgage Bankers Association (MBA) said on Wednesday.
Not only have mortgage rates doubled since the start of the year, but it’s getting harder to get a loan.
The Federal Reserve is taking an aggressive approach to raising interest rates to curb high inflation, threatening more American homebuyers struggling with the cost of borrowing.
Average 30-year fixed-rate mortgage rates rose to 6.6 percent from 6.29 percent from last week, while 15-year fixed-rate mortgage rates jumped to 5.9 percent from 5.44 percent, compared to 3.01 percent a year ago, according to mortgage buyer Freddie Mac.
The Purchase Index, a measure of all mortgage requests for single-family homes, fell 2.1 percent from the previous week and 39 percent from a year ago, while the MBA Refinance Index fell 1.8 percent last week to 86 percent from a year ago.
The central bank increased its benchmark interest rate fivefold this year.
Mortgage rates typically rise or fall in line with the 10-year Treasury yield, but the 10-year yield is heavily influenced by Fed interest rate expectations.
In contrast, some places such as Southern California are experiencing a sharp decline in home prices for the first time in a decade.
Home prices, which had been steadily rising turned negative, a result of mortgage rates that have dampened demand and reduced sales.
Typical Southern California home prices are nearly 6 percent below the all-time high reached in May, according to Zillow data released Wednesday.
Some real estate experts predict home prices will fall as they did during the Great Recession as values are coming down in many corners of the country.
Reuters contributed to this report
