Mortgage rates reached a 16-year high last week, further dampening demand from home buyers, according to data from the Mortgage Bankers Association (MBA) released Wednesday.
The 30-year fixed mortgage rate rose to 6.75 percent in the final week of September, the highest figure since 2006. Mortgage rates have climbed a whopping 1.3 percentage points over seven straight weeks of increases.
Mortgage applications fell 14.2 percent from the week prior, according to the MBA, amid rising mortgage rates, which stem from the Federal Reserve's persistent interest rate hikes aimed at fighting inflation.
"The steep increase in rates continued to halt refinance activity and is also impacting purchase applications, which have fallen 37 percent behind last year's pace," Joel Kan, the MBA's associate vice president of economic and industry forecasting, said in a statement.
"There was also an impact from Hurricane Ian's arrival in Florida last week, which prompted widespread closings and evacuations," he added.
Mortgage rates have more than doubled over the last year, making monthly payments far more expensive.
Sky-high rates, combined with near-record home prices, are scaring would-be buyers away from the housing market. Home sales are slowing throughout much of the U.S. after a prolonged housing boom during the pandemic. Analysts expect prices to dive in the coming months.
Federal Reserve Chairman Jerome Powell recently told reporters the U.S. housing market will likely "have to go through a correction" to bring prices down to attainable levels.