U.S. mortgage rates climb to three-year high as Treasury yields surge
The average 30-year mortgage rate rose to 7.6%, its highest level since late 2023, while 10-year Treasury yields hit 5.34% amid rising energy costs and bond market volatility.
U.S. mortgage rates reached 7.6% for a 30-year fixed loan, the highest level since late 2023, as Treasury yields climbed sharply. The yield on the benchmark 10-year Treasury hit 5.34% in early trading, its strongest rise since 2002, while the 30-year Treasury yield rose to 5.69%.
The yield surge is linked to higher inflation driven by rising energy prices tied to the conflicts in Iran and Ukraine. Gas prices are about 47% above February levels, and diesel prices have jumped roughly 70%, pressuring shipping and agriculture costs.
Supply-chain data from S&P Global and the Institute for Supply Management indicated that price pressures intensified in September, with manufacturers noting a notable rise in costs. The market reaction saw the S&P 500 and Nasdaq Composite each slip 0.3%, and the Dow fall about 300 points.
President Donald Trump said he is still weighing a possible ban on U.S. diesel exports, a move that some cabinet members warn could further lift prices. The administration has asked European allies, including Germany and France, to release emergency diesel stockpiles. U.S. Trade Representative Jamieson Greer told Bloomberg he discussed a collaborative response with his French counterpart.
A European Commission spokesperson said an “important” meeting with the International Energy Agency on diesel supplies is scheduled for Friday, after which action may be taken.
The Federal Reserve’s preferred inflation gauge, the personal consumption expenditures (PCE) index, showed a 3.4% year-over-year rise, slightly below expectations, but core and “super-core” measures remained elevated. KPMG chief economist Diane Swonk noted that the cooler headline figure masks underlying price pressures.
Economists note that rising yields and persistent inflation keep housing affordability strained, with market odds suggesting about a 60% chance of another Fed rate hike at the early December meeting. PNC economists warned that affordability challenges extend beyond official inflation metrics and could keep the cost of living stressful for households.