US mortgage applications fall 1.3% as rates jump to 23-year high

By Ovunc Kutlu

ISTANBUL (AA) - US mortgage applications fell 1.3% last week as mortgage interest rates jumped to their highest in almost 23 years, according to a report Wednesday by the Mortgage Bankers Association (MBA).

The Market Composite Index, a measure of mortgage loan application volume, fell 1.3% on a seasonally adjusted basis for the week ending Sept. 22, compared to the previous week. On an unadjusted basis, the index declined 2%.

The 30-year fixed mortgage rate climbed to 7.41%, from 7.31% a week ago, which is also the highest since December 2000. The 30-year fixed jumbo mortgage rate increased to 7.34% -- the highest rate in the history of the jumbo rate series dating to 2011, according to the MBA.

MBA Vice President and Deputy Chief Economist Joel Kan said the Fed's interest rates are expected to be "higher for longer," which drove the increase in Treasury yields.

"Overall applications declined, as both prospective homebuyers and homeowners continue to feel the impact of these elevated rates. The purchase market, which is still facing limited for-sale inventory and eroded purchasing power, saw applications down over the week and 27 percent behind last year’s pace," he added.

The average contract interest rate for a 15-year fixed-rate mortgage increased to 6.73% from 6.62%.

The MBA survey covers more than 75% of US retail residential mortgage applications.