Mortgage demand falls as rates climb above 7%

Mortgage demand weakened last week as borrowing costs moved sharply higher, according to data from the Mortgage Bankers Association. Total mortgage applications fell 4.1% from the previous week after a Labor Day adjustment. The average rate on a 30year fixed mortgage rose to 6.97% from 6.85%, and separate market data showed rates moving above 7% by the end of the week. Analysts said higher bond yields, inflation concerns, energy prices, and expectations around Federal Reserve policy helped push rates up. Refinancing activity was hit hardest. Applications to refinance a home loan fell 9% for the week and were 65% below the same period a year earlier, as higher rates reduced the benefit for many borrowers. Homepurchase applications declined 1% on the week and were 19% lower than a year ago. Buyers continue to face elevated home prices, even as more homes have come onto the market in some areas, much of it at the higher end of the price range.