U.S. mortgage demand fell to its lowest level in two years as borrowing costs continued to rise, with the average contract rate for 30-year fixed mortgages with conforming balances increasing to 7.30% from 7.12% last week. Mortgage News Daily's separate survey showed rates reaching 7.58% on Tuesday. Applications fell 6% in the week ended Sept. 25, extending a six-week decline, while refinancing applications dropped 9% and purchase applications fell 4%. Refinancing volume was 56% below a year earlier. Higher longer-term Treasury yields, energy-driven inflation, a resilient U.S. economy and hawkish Federal Reserve signals have pushed mortgage rates higher. Mortgage pricing is driven mainly by Treasury yields and mortgage-backed securities rather than directly by the Fed's benchmark rate, leaving elevated borrowing costs and rising home prices as continuing constraints on affordability and housing demand.