FX.co ★ US Mortgage Applications Fall Further

US mortgage applications fell 4.1% in the second week of September, deepening the 2.7% decline recorded the week before and marking the steepest drop in seven weeks, according to data from the Mortgage Bankers Association. The downturn coincided with a sharp rise in borrowing costs, as the average rate on the benchmark 30-year fixed mortgage climbed to 6.97%, its highest level in 16 months. Refinance applications, which tend to react more quickly to changes in interest rates, dropped 9%. The move came as yields on longer-dated US Treasury securities jumped at the start of the month, with higher energy prices, increased debt issuance, and widening fiscal deficits curbing investor appetite for longer-duration fixed income. Meanwhile, mortgage applications for home purchases edged down 1%.