30-Year Mortgage Rates Exceed 7% for First Time Since May 2024

The average rate for a 30-year fixed mortgage climbed above 7% for the first time in more than two years, according to new figures released Monday by the Mortgage Bankers Association (MBA). The benchmark rate reached 7.12% during the week ending Sept. 18, marking its highest point since May 2024.

The escalation in borrowing costs compounds financial pressure on purchasers in a market where home values remain near historic peaks. Mike Fratantoni, the MBA’s senior vice president and chief economist, noted that as fixed-rate options grew pricier, an increasing number of shoppers are turning to adjustable-rate mortgages (ARMs) to secure lower initial payments.

Fratantoni highlighted that the rate on a 5/1 ARM was trading at more than 1 percentage point below the fixed-rate counterpart. These adjustable loans provide a locked-in interest rate for an initial five-year period before adjusting in line with broader market conditions.

Market watchers will also be looking at upcoming data from Freddie Mac, which is set to publish its own 30-year fixed mortgage readings Thursday. As of Sept. 17, Freddie Mac reported the average rate at 6.95%, according to CBS News analysis.

The trajectory of mortgage rates closely tracks the yield on the 10-year Treasury note, which has surged recently amid investor concerns regarding inflation, government debt levels, and rising borrowing expenses. The 10-year yield hovered near 5% on Wednesday, representing a gain of more than one percentage point since the onset of the war in Iran in late February.

Compounding these pressures, the Federal Reserve announced a quarter-point interest rate hike last week, a move that had been widely anticipated by financial markets. Jake Krimmel, a senior economist at Realtor.com, previously told CBS News that some lenders may have already factored the Fed’s decision into their mortgage pricing.

While the housing sector typically experiences a slowdown as the summer selling season concludes, analysts warn that elevated rates could further dampen activity. Richard Shane, head of consumer and specialty finance research at J.P. Morgan, stated in a July report that while the pipeline of prospective buyers remains robust, affordability constraints and rate volatility threaten to stall origination growth if high borrowing costs persist.