Mortgage rates climb past 7.5%, highest in nearly three years
The average 30-year mortgage rate climbed to about 7.54% on Tuesday, up from 7.37% a week earlier, according to Mortgage Research Center data. Rising Treasury yields have pushed home loans to their most expensive level since late 2023, so applications are falling and more sellers are cutting their asking prices.
Borrowing to purchase a home keeps getting more expensive. The average rate on a 30-year fixed mortgage reached 7.542% on Tuesday, according to Mortgage Research Center data reviewed by Fortune. That is up from 7.373% a week earlier, while the average 15-year rate rose to 6.737%.
Freddie Mac's weekly survey tells the same story. Its average 30-year rate jumped to 7.28% for the week ending Oct. 1, up from 7.03% the week before, Realtor.com reported. That was the highest level since late November 2023 and the biggest one-week jump in more than four years. A year ago, the rate averaged 6.34%.
Mortgage rates generally follow the 10-year Treasury yield, which touched 5.34% last Thursday, a level not seen since April 2002, National Mortgage News reported. Investors have been selling bonds over rising oil prices from the Middle East conflict, worries about inflation and growing federal deficits, Realtor.com said.
The Federal Reserve added to the pressure in September, when it raised its key rate for the first time since 2023. Minutes from that meeting come out Wednesday.
What it costs: At 7.542%, a $300,000 30-year loan would carry about $458,000 in interest over its life, Fortune calculated.
Buyers are stepping back, as mortgage applications fell 6% in the week ending Sept. 25, the Mortgage Bankers Association said. "Mortgage rates jumped to their highest level in almost three years, pushing borrowers to the sidelines," said MBA economist Joel Kan.
Sellers are becoming more flexible. In September, 20.8% of home listings had a price cut, the highest share in four years, according to Realtor.com senior economist Hannah Jones. "Buyers have more options at lower price points, but elevated mortgage rates keep homeownership out of reach for many," she said.
Forecasters expect little immediate relief. Zillow raised its year-end forecast for the 30-year rate to 7.1%, National Mortgage News reported. One lender said customers who once asked about 5% rates now ask about 8%.
Some background: Mortgage rates hit a record low of 2.65% in January 2021, when the Fed held its rate near zero during the pandemic.
What we know: Rates are above 7.5% on one daily measure and at a three-year high on Freddie Mac's survey.
What we don't: Whether falling odds of an October Fed hike will slow the climb.
Where outlets agree Realtor.com and National Mortgage News both report that Freddie Mac's 30-year average rose to 7.28% from 7.03% as the 10-year Treasury yield touched 5.34%.
Where they differ Freddie Mac's chief economist said the housing market is still supported by favorable conditions, while Realtor.com's economist described a market stalled by affordability pressure.