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Mortgage demand plummeted to a 28-year low as the average long-term rate creeped up toward 8%.

According to leading real industry group Mortgage Bankers Association, the average rate on the benchmark 30-year home loan climbed to 7.53% this week — the highest rate since 2000.

A separate report on Bankrate showed that Thursday’s average on a 30-year fixed mortgage rate was even higher, 7.88%.

The rate was 6.75% at this time last year and mortgages below 3% were offered at the start of 2021. The mortgage rate hasn’t hit 8% since 1995.

Mortgage applications and applications to refinance a home have stalled dramatically, falling 6% and 7% for the week, respectively, according to MBA.

“The purchase market slowed to the lowest level of activity since 1995, as the rapid rise in rates pushed an increasing number of potential homebuyers out of the market,” MBA’s deputy chief economist Joel Kan told The Post.

The higher rates add hundreds of dollars a month in costs for borrowers, limiting how much they can afford in a market already unaffordable to many Americans.

They also discourage homeowners who locked in low rates two years ago from selling.

The lack of housing supply also weighs on sales of previously occupied US homes, which are down 22.3% through the first seven months of the year versus the same stretch in 2022.

In response, Kan noted that applications for adjustable-rate mortgages increased, making up 8% of purchase applications — up from 6.7% a month ago when interest rates sat around 7%.

ARMs typically offer lower interest rates, though they’re fixed for shorter periods of time.

Mortgage rates have been rising along with the 10-year Treasury yield, which has historically been considered a key benchmark for mortgage rates.

Thus, as mortgage rates near 8%, the 10- and 30-year Treasury yields have also reached new heights, hitting 4.8% and 4.925%, respectively, on Tuesday — both the highest since 2007.

The advances could keep upward pressure on inflation, giving the Federal Reserve reason to keep interest rates higher for longer.

In August, US inflation rose 3.7% from 2022. Though it’s still above the Fed’s 2% goal, it’s a stark difference from June 2022’s four-decade peak at 9.1%.

Inflation’s substantial cooldown in recent months has forced many home sellers to slash their asking prices to lure in potential buyers.

Those who don’t slash their asking price risk selling at a loss. Last month, a report by real estate brokerage Redfin revealed that home sellers in America’s major cities are already doing this.

San Francisco sellers had it the worst, Redfin’s report showed, as they are a whopping four times more likely than the average US home seller to take a loss.

Detroit is home to the second-highest share of homeowners who take a loss in their home-selling transactions, at 6.9%, followed by Chicago and New York, where 6.5% and 5.9% of homeowners take a loss in selling their homes, respectively.

Though the share of New York homeowners who reported a loss was half that in San Francisco, the cities were tied for the largest median loss in dollars, at $100,000, Redfin found in a separate analysis.

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DeFi revives the spirit of capitalism

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DeFi revives the spirit of capitalism

Decentralized finance is giving capitalism a makeover. There’s finally a version where everyone gets a fair shot, and everything’s out in the open.

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Landmark moment as the return of Trump stuns UK into action on defence

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Landmark moment as the return of Trump stuns UK into action on defence

This is the moment the government finally woke up to the enormity of the threat faced by the UK and the inability of its hollowed-out armed forces to cope.

But make no mistake, today’s decision to increase military spending is not just about increasing the number of troops, warships and fighter jets or even ensuring they can use the latest drones, satellites or artificial intelligence breakthroughs.

This is an emergency that requires the entire nation to take responsibility for – or at least an interest in – the defence of the nation and the importance of being able to deter threats.

Politics latest: PM makes defence commitment

Sir Keir Starmer signalled this fundamental shift in priorities when he told parliament: “We must change our national security posture because a generational challenge requires a generational response that will demand some extremely difficult and painful choices.”

He continued: “And through those choices, as hard as they are, we must also seek unity. A whole society effort that will reach into the lives, the industries, and the homes of the British people.”

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Starmer announces defence spending hike

Such a proposal is not something new.

The UK has a long history of being prepared for war.

The entirety of the Cold War era was framed around ensuring the UK had enough troops and reservists to fight a sustained conflict, supported by a vast industrial base to produce weapons and a society that was intrinsically resilient, with the ability to sustain itself with emergency food rations, power supplies and an understanding of the need to be prepared to respond in an emergency.

Back then, the threat was war – maybe even nuclear annihilation – with the Soviet Union.

Today the threat is just as stark but also far more complex.

Russia is the immediate danger. But China poses a long-term challenge, while Iran and North Korea are also menacing adversaries.

Most fundamentally though is the change in the UK’s ability to rely squarely on its strongest ally, the United States.

Donald Trump, with his resentment of shouldering the responsibility for European security, has made clear the rest of the transatlantic NATO alliance must take much more of the share of defending themselves.

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‘The world is becoming more dangerous’

He has also signalled that he may not even be willing to deploy America’s powerful military to defend every single member state – singling out those who pay far too little on their defences.

He has a point when it comes to Europe freeloading on the might of the United States for too long.

But the suggestion that European allies can no longer automatically rely on their American partner to come to their aid is enough to call into question the value of Article 5 of the NATO Alliance, which states an attack on one is an attack on all.

When it comes to deterring foes, there must be no such uncertainty between friends.

Read more from Sky News:
Why Trump wants Ukraine’s minerals
Putin hints at potential deals with US
Sanctions have changed European imports

Soldiers from 5 Scots during training at West Freugh Airfield as they take part in Exercise Joint Warrior, which sees warships, submarines and aircraft take to the west coast of Scotland for a two-week training exercise. PRESS ASSOCIATION Photo. Picture date, Monday April 16, 2012. The exercise is held twice a year to prepare forces from the UK, US, Denmark, Norway, France, Canada, Germany and the Netherlands for events and active service. See PA story DEFENCE Exercise. Photo credit should read:
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File pic: PA

It is why countries across Europe are being urged by the new head of NATO to rapidly ramp up defence spending and adopt what NATO Secretary General Mark Rutte has called a “war mindset”.

The UK, who along with France are the only two NATO powers in Europe to possess nuclear weapons, has a bigger responsibility than most to heed that call.

Russia’s invasion of Crimea in 2014 was not a sufficient enough alarm bell.

Eve Russian President Vladimir Putin’s full-scale war in Ukraine in 2022 failed to shake the UK and most of the rest of Europe from their slumber.

Instead, it seems the return of Donald Trump to the White House, with all the unpredictability that he brings, is the final shock that has stunned the UK into action.

Of course, defence insiders know that increasing spending to 2.5% of GDP by 2027 is not soon enough.

But this – coupled with Sir Keir’s language about the need for a “generational response” – is a landmark moment.

The beginning of the correction of a strategic mistake made by Labour and Conservative governments over years to take a “holiday from history” and fail to find credible, capable armed forces and ensure society understands the importance of defence and the ability to deter.

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Badenoch says US is acting in its national interest – and UK must do the same

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Badenoch says US is acting in its national interest - and UK must do the same

Kemi Badenoch has said the US is acting in its national interest and the UK also needs to, ahead of Sir Keir Starmer’s meeting with Donald Trump.

The Conservative leader, giving a foreign policy speech in London on Tuesday, told Sky News’ political editor Beth Rigby the US is “not an authoritarian regime” and shares the same Western values as the UK, including free trade, free enterprise and free speech.

On Monday, the US sided with Russia on two UN resolutions when they declined to condemn Russia’s war in Ukraine, and backed a resolution for the conflict’s end that avoided labelling Russia as the aggressor or acknowledging Ukraine’s territorial integrity.

Politics latest: UK defence spending to rise to 2.5% of GDP

Ms Badenoch said the second resolution showed the US “acting in its national interests”.

“It is being realistic and we need to be so too,” she said.

“Now, that doesn’t mean we’re going to agree on everything. We disagree with them on that resolution, for example.

“But that is why I want the prime minister to be successful in his talks and find out what the thinking was behind that.”

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Putin hints at potential deals with US

‘Absolutely critical’ Starmer succeeds in DC

Ms Badenoch also said it is “absolutely critical” that Sir Keir succeeds in his talks on ending the war in Ukraine with Mr Trump on Thursday.

However, she did not provide details of exactly what he should succeed in.

Sir Keir is expected to discuss the importance of Ukraine’s independence, European involvement in peace talks and US security guarantees with Mr Trump.

Mr Trump, since becoming president just over a month ago, has called Ukrainian president Volodymyr Zelenskyy a dictator and suggested Kyiv started the war.

He has also sent US officials to negotiate with Russia in Saudi Arabia – but did not invite Ukraine or any European leaders.

A serviceman of the 93rd Kholodnyi Yar Separate Mechanized Brigade of the Ukrainian Armed Forces launches a reconnaissance drone at his position on a front line, amid Russia's attack on Ukraine, near the town of Toretsk, Donetsk region, Ukraine, February 22, 2025. Iryna Rybakova/Press Service of the 93rd Kholodnyi Yar Separate Mechanized Brigade of the Ukrainian Armed Forces/Handout via REUTERS ATTENTION EDITORS - THIS IMAGE HAS BEEN SUPPLIED BY A THIRD PARTY.
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The third anniversary of the Ukraine war took place on Monday. Pic: Reuters

Call for Starmer to cut development aid and welfare budget

Ms Badenoch urged Sir Keir to “repurpose” development aid in the short term and look to make welfare savings to fund increased defence spending.

She said 2.5% of GDP on defence is “now no longer sufficient” because any country that “spends more on debt interest than it does on defence, as the UK does today, is destined for weakness”.

“I will back the prime minister in taking these difficult decisions,” she added.

Her call came ahead of the prime minister’s unexpected statement on Tuesday lunchtime, in which he said UK defence spending will rise to 2.5% by 2027, and 3% in the next parliament.

Read more:
Starmer says ‘US is right’ about UK defence

Russian oligarchs face UK ban

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You can email James, Mark and Martha on trump100@sky.uk

The world has changed and the UK is not ready

Ms Badenoch said the UK must “accept reality” that the world has changed and “we can no longer hide behind vapid statements that were at best ambitious 20 years ago and are now today outright irrelevant”.

“It is time to speak the truth. The world has changed and the UK is not ready, so we must change too,” she said.

She accused the West of not doing enough to support Ukraine as “we were too ineffective, too indecisive and too often behind the curve”.

Because of that, she said: “Putin gained what he needed most, time. We now see the consequences.

“An end to the war is being negotiated while a fifth of Ukrainian territory is under enemy occupation.”

However, she said she was proud of the support her government gave Ukraine in the run-up to Vladimir Putin’s invasion and “in those first crucial weeks and months of the war”.

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