Mortgage rates in U.S. extend climb to 6.94%, highest since 2002

U.S. mortgage rates continued to climb last week, advancing to a two-decade high and escalating the downturn in the housing market.

The contract rate on a 30-year fixed mortgage jumped another 13 basis points to 6.94% in the week ended Oct. 14, marking the ninth-straight increase, according to Mortgage Bankers Association data released Wednesday.

That pushed down the group’s gauge of applications to purchase or refinance a home by 4.5%, the ninth drop in 10 weeks, to remain at the lowest level since 1997.

Mortgage News Daily, which updates more frequently, put the 30-year rate at 7.15% on Tuesday.

The data represent another point in the continued slide of the housing market, where the effects of the Federal Reserve’s policies have been most evident so far.

Separate data Tuesday showed a measure of homebuilder sentiment has fallen every month this year, and existing-home sales are projected to drop in September for an eighth month in data to be released Thursday.

The MBA’s effective 30-year fixed rate, which includes the effects of compounding, rose to 7.21% in the period, also the highest since 2002.

The rate on a five-year adjustable mortgage climbed 9 basis points to 5.98%.

The steady jump in fixed mortgage rates is encouraging more homebuyers to seek out cheaper financing options such as adjustable-rate loans.

Five-year adjustable mortgages represented 12.8% of loan application volume last week, the most since March 2008.

MBA’s index of applications to purchase a home fell 3.7% to 164.2, the weakest reading since 2015, while the gauge of refinancing decreased nearly 7% to a fresh 22-year low.

The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts.

The data cover more than 75% of all retail residential mortgage applications in the U.S.