The interest rate on the most common type of U.S. residential mortgage plunged last week by the most in nearly 16 months on the back of a rally in the Treasury market that drove down the benchmark yields used to set home loan costs.

The Mortgage Bankers Association on Wednesday said the average contract rate on a 30-year fixed-rate mortgage dropped in the week ended Nov. 3 by a quarter percentage point to 7.61%, the lowest in about a month. It was the largest weekly drop since late July 2022.

The second weekly decline further pulled home-purchasing borrowing costs down from two-decade highs near 8% reached in October while yields on the 10-year Treasury note, the benchmark for U.S. home loan rates, had been charging higher.

That months-long updraft in yields saw a sharp reversal last week after the U.S. Treasury said upcoming debt issuance would be somewhat less than previously expected and the Federal Reserve left its key overnight policy rate on hold for a second straight meeting.

(Reporting By Dan Burns; Editing by Chizu Nomiyama)