(Reuters) – The average interest rate on the most popular mortgage loan in the United States rose to its highest level since 2001 as tightening financial conditions hit the housing sector, data from the Mortgage Bankers Association showed on Wednesday.
The average contract rate on a 30-year fixed-rate mortgage rose 22 basis points to 7.16% for the week ended October 21, while the MBA Composite Market Index, a measure of the volume of mortgage loan applications, fell 1.7% from the previous week. . . Mortgage application activity is at the slowest pace since 1997.
Mortgage rates have more than doubled since the start of the year, as the Federal Reserve follows a strong path of raising interest rates to rein in stubbornly high inflation.
The central bank is expected to raise interest rates by 75 basis points for the fourth consecutive time at the conclusion of its next policy meeting on November 1 and 2.
These measures, designed to cool the economy enough to curb price pressures, hit the interest rate-sensitive housing sector hard as expectations of a Fed tightening boosted Treasury yields.
The yield on 10-year bonds serves as a benchmark for mortgage rates.
(Reporting by Lindsay Dunsmuir) Editing by Clarence Fernandez
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