Mortgage rates experienced a significant jump on Thursday, with the average rate on a 30-year fixed loan reaching 7.45%, according to data from Mortgage News Daily. The increase followed a steep climb in bond yields, which pressed borrowing costs higher for homebuyers across the United States.
The spike occurred after Mortgage News Daily conducted its morning survey of lenders and brokers, only to re-run the survey in the afternoon as the yield on the 10-year Treasury note continued to climb. Consequently, rates rose an additional 19 basis points from the previous day’s average of 7.26%.
This marks a sharp deviation from earlier reports by other outlets, such as Freddie Mac, which had indicated that the rate had just surpassed the 7% threshold on Thursday morning based on a weekly average rather than daily fluctuations.
Matthew Graham, chief operating officer at Mortgage News Daily, noted that the milestone of breaking 7% was first reached on September 10, following inflation reports that heightened concerns about a potential Federal Reserve rate hike the following week. “A combination of Fed comments, higher oil prices, and stronger economic data have added to the pain since then,” Graham wrote.
The current rate environment represents a substantial increase from late February, when 30-year fixed rates dipped to 5.99%. Rates began climbing at the onset of the conflict with Iran and accelerated again in early September, particularly after the Federal Reserve raised its benchmark rate. Mortgage rates generally track the performance of the 10-year U.S. Treasury yield.
The housing market is currently grappling with a challenging trifecta of high home prices, diminished consumer confidence, and a persistent shortage of affordable inventory.
While the morning’s rate increase appeared linked to specific economic indicators, the afternoon’s surge seemed less driven by fundamental data. “No obvious catalyst. Explanations require concocting narratives and then defending them. There’s no objective, irrefutable way to connect the dots today. Sellers decided to sell… a lot,” Graham said regarding the unexpected bond selloff.
Graham’s right—no clear catalyst, just bond sellers panicking. But for first-time buyers at 7.45 percent, the math simply doesn’t work anymore.
First time I’ve seen a 19 basis point jump in a single day. This volatility is exhausting for anyone trying to budget.