Index shows mortgage-application slump

An index for U.S. mortgage applications fell last week to the lowest level in almost four years as borrowing costs hit the highest level 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 level in about two years.

The data signal that higher mortgage costs are a growing headwind for U.S. homebuyers, 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 sales.

Borrowing costs have risen as the Federal Reserve has 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 started a two-day meeting Wednesday in Washington. It is expected to hold off on another increase but leave open the possibility of one in December.