Home-buying demand falls as mortgage rates reach multi-decade highs

The 30-year mortgage rate hit it highest level since December 2000, and the jumbo rate rose to a 12-year high.

The market index fell 1.3% to 189.6 for the week ending September 22 from a week earlier. A year ago, the index stood at 254.8.Few buyers found it a good time to buy a home. The purchase index — which measures mortgage applications for the purchase of a home — fell 1.5% from last week.The average contract rate for the 30-year mortgage for homes sold for $726,200 or less was 7.41% for the week ending September 22. That’s up from 7.31% the week before, the MBA said.

The average rate for a 30-year mortgage backed by the Federal Housing Administration rose to 7.16% from 7.08%. The FHA rate is at the highest level since March 2002. The rise in rates is likely to hurt home-buying demand further, hurting sales of both new and previously owned homes. Refinancing activity is also likely to dry up further, as few homeowners have a rate higher than 7% that would benefit from refinancing.

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