Mortgage Rates Jump to Nearly 3-Year High as Treasury Yields Surge

U.S. mortgage rates jumped to their highest level in nearly three years this week as a sharp selloff in government bonds pushed borrowing costs higher across the economy.

The average rate on a 30-year fixed mortgage climbed to 7.28 percent as of Oct. 1, up from 7.03 percent a week earlier, according to Freddie Mac.

It was the largest weekly increase in four years and the highest level since November 2023. A year ago, the average rate was 6.34 percent.

Rates on shorter-term mortgages also increased. The average 15-year fixed mortgage rose to 6.60 percent from 6.42 percent the previous week and 5.55 percent a year ago.

Higher mortgage rates increase monthly payments and reduce how much buyers can afford to borrow. Realtor.com estimates that a half-percentage-point swing in rates can change purchasing power by roughly $30,000 for a buyer with a $2,000 monthly principal-and-interest budget.

Mortgage rates rose alongside yields on 10-year U.S. Treasury bonds, which have surged during a broader global bond-market selloff.

On Oct. 1, the 10-year Treasury yield briefly topped 5.3 percent, a level not seen over the recent two decades, before retreating to 5.2 percent. The 30-year Treasury yield also reached its highest level since 2002.

Bond yields rise when bond prices fall.

Housing Market Feels the Strain

The latest jump in mortgage rates is hitting a housing market that was already showing signs of slowing down.

Realtor.com said in its Sept. 30 housing trends report that the number of homes under contract fell 4.1 percent in September from a year earlier, following a much smaller 0.2 percent decline in August.

At the same time, the number of homes available for sale continued to grow. Active listings increased 5.4 percent from a year earlier to about 1.16 million, the fastest annual growth in six months.

Inventory remains 9.1 percent below typical pre-pandemic levels, but the gap has narrowed considerably as homes accumulate on the market.

Sellers have increasingly responded by lowering asking prices in an effort to attract buyers.

About 20.8 percent of homes listed for sale had their prices reduced in September, according to Realtor.com. That was the highest share for the month since 2018 and the highest for any month since October 2022.

Mortgage application data also point to softer demand.

The Mortgage Bankers Association said its Market Composite Index, which tracks overall mortgage application volume, fell 6 percent in the week ended Sept. 25 on a seasonally adjusted basis from the previous week.