US Mortgage Rates Jump to 7.31%, Highest Level Since Late 2000

US mortgage rates rose to the highest level since late 2000 last week, sending a key measure of demand down to the lowest in nearly three decades.

(Bloomberg) — US mortgage rates rose to the highest level since late 2000 last week, sending a key measure of demand down to the lowest in nearly three decades.

The contract rate on a 30-year fixed mortgage increased 15 basis points to 7.31% in the week ended Aug. 18, according to Mortgage Bankers Association data out Wednesday.

The gauge of home-purchase applications fell for a sixth week to the lowest level since 1995, which helped drag the overall measure of mortgage applications down further.

Borrowing costs have continued to rise so far this week, and Mortgage News Daily, which updates more frequently, put the 30-year fixed rate at almost 7.5% on Tuesday.

Mortgage rates are benchmarked to US Treasuries, and yields on those securities have been climbing as traders increasingly see a resilient economy keeping interest rates higher for longer.

Federal Reserve Chair Jerome Powell is set to speak at the central bank’s annual Jackson Hole symposium later this week, and minutes from policymakers’ gathering last month showed most officials still saw significant upside risks to inflation, which could require further rate hikes.

That’ll keep mortgage rates elevated and, along with still-high home prices, put further strain on a residential housing market that had been showing promise earlier in recent months.

Read more: US Housing Affordability Hits Worst Point in Nearly Four Decades

The latest housing data further illustrate the trend — homeowners are reluctant to move and take on a higher mortgage rate, so prospective buyers are seeking out new construction instead.

A report later Wednesday is expected to show new-home sales ticked up last month to hover near the highest level in a over a year.

The MBA’s overall gauge of mortgage applications, which also includes refinancing, fell to 184.8, near the lowest level since 1996.

The 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 US.

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