Demand for mortgage loans in Europe fell by 74 percent in 2022’s final quarter, European Central Bank (ECB) data shows, the steepest quarterly drop since 2003 when the bank began tracking the figure.

The rate also was a sharp acceleration from the third quarter’s 42-percent plunge.

Demand for mortgages cratering at such a pace foreshadows a 12-percent annual loss of investment in housing, which would translate to a 0.78-percent annual loss to the region’s GDP, according to Capital Economics.

U.S. mortgage applications fell more than 10 percent during the last week of January, the most dramatic weekly decline on record, according to the Mortgage Bankers Association.

The collapse of the Eurozone’s mortgage demand “was mainly driven by the general level of interest rates, lower consumer confidence, and deteriorating housing market prospects,” the ECB’s report said.

The ECB has jacked its key rate from -0.50 percent in June to 2.5 percent as of 2 February, the fastest pace of rate increases in the European Union’s 24-year history.

As a result, Europe’s housing sector sees a “dire picture” ahead as the central bank’s rate hikes “feed quickly through to the credit channel and, in turn, take a toll on the economy,” HSBC economist Fabio Balboni said to the Financial Times.

Home prices will fall an average of 2.4 percent across the Eurozone this year, analysts told the FT, with prices dropping as much as 5 percent in Germany and the Netherlands.

In the U.S., median home prices have fallen steadily for more than five months, settling at $366,900 in December, compared to a peak of $413,800 last June.

The slide has driven the average U.S. interest rate for a 30-year, fixed-rate mortgage down to 6.36 percent on 6 February.

TREND FORECAST: Home prices in Europe are not falling enough to bring significantly more people into home ownership, especially because variable-rate mortgages are widespread in some countries, such as Spain.

Europe’s housing recession will help drag the continent down into recession as this year progresses.