NEW YORK — A gauge of US mortgage applications fell last week to the lowest level in almost four years as borrowing costs hit the highest since 2010, adding to challenges for the housing market.
The Mortgage Bankers Association’s market composite index fell 4 percent in the week ending Nov. 2 to 316.2, the lowest reading since December 2014, according to a report Wednesday from the Washington-based group. The survey’s contract rate on a 30-year fixed loan rose to 5.15 percent from 5.11 percent, while a gauge of applications to purchase homes dropped 5 percent to the lowest in about two years.
The data signal higher mortgage costs are an ever-growing headwind for US home buyers, who already face a dearth of affordable listings. Residential investment has been a drag on economic growth for five of the past six quarters, and recent data show cooling in sales in construction.
Higher borrowing costs have come as the Federal Reserve raised interest rates eight times since December 2015, part of a strategy to keep a strengthening labor market from overheating. The central bank’s Federal Open Market Committee was to start a two-day meeting Wednesday in Washington, and is expected to hold off on another hike but leave open the possibility of one in December.