30-Year Mortgage Rates Climb Above 7% as Adjustable Loans Gain Appeal
The average rate for a 30-year fixed mortgage rose to 7.12% last week, its highest level in over two years, prompting more borrowers to consider adjustable-rate mortgages.
Mortgage rates for a 30-year fixed loan reached 7.12% for the week ending Sept. 18, the highest level since May 2024, according to the Mortgage Bankers Association. The increase adds to borrowing costs while home prices stay near historic peaks.
"As fixed rates continued to climb, more buyers opted for riskier adjustable-rate mortgages, which offer a lower initial rate," said Mike Fratantoni, senior vice president and chief economist at the MBA. Adjustable-rate mortgages tied to the 5/1 index were quoted more than one percentage point lower than the fixed-rate benchmark. Freddie Mac’s data released the day before showed the 30-year fixed rate at 6.95% on Sept. 17. The rise in mortgage rates mirrors a jump in the 10-year Treasury yield, which has risen as investors react to inflation concerns, government debt and higher borrowing costs. The Federal Reserve recently raised its policy rate by a quarter point, a move some lenders had already factored into loan pricing. The 10-year Treasury yield was around 5% on Wednesday, up more than a point since the conflict in Iran began in February. Higher financing costs could further dampen housing activity as the market transitions out of the summer season.