US mortgage rates reach 7.5%; home-buying slump hits sixth week

U.S. mortgage rates have climbed to 7.5%, triggering a sixth consecutive week of declining home-buying activity, according to data from the Mortgage Bankers Association. The 30-year fixed mortgage contract rate surged by one basis point to 7.50% in the week ending October 9th, marking the highest level since November 2023. This rate increase comes nearly one percentage point higher than the end of June.

The Mortgage Bankers Association's purchase index, which gauges loan applications, experienced a 4% drop, marking the sixth weekly decline – the longest such streak since late 2023. This index stands at its lowest level since early 2025. Prior to the recent surge in mortgage rates, home sales had shown signs of stabilizing. However, data released by the National Association of Realtors on October 13th indicated a slight increase in purchases of previously owned homes, but this figure primarily reflects contract signings prior to the latest surge in borrowing costs.

Lawrence Yun, chief economist at the National Association of Realtors, noted that the outlook for closing activity in the fourth quarter will likely be down, possibly even measurably down due to the higher rates. Data from brokerage Redfin Corp. revealed that contract signings in September declined by 4% compared to the previous month, marking the largest drop in more than three years.

The MBA's refinance gauge fell for an eighth consecutive week, reaching the lowest level since early 2025, with the overall market index declining by 2.7%, marking the sixth straight decline. The Mortgage Bankers Association survey, conducted weekly since 1990, uses responses from mortgage bankers, commercial banks, and thrifts and covers over 75% of all retail residential mortgage applications in the U.S.