Mortgage rates soared past 7% last week, hitting their highest level in more than two years, according to data from the Mortgage Bankers Association. 30-year fixed-rate mortgages rose to 7.12% the week ending Sept. 18, the MBA said. It last reached that level in May 2024, according to the mortgage industry group. Higher rates increase buyers’ borrowing costs at a time when home prices remain near record levels. As fixed rates continued to rise, more buyers opted for riskier adjustable-rate mortgages, which offer a lower initial rate, Mike Fratantoni, senior vice president and chief economist at MBA, said in a statement. Rates on 5/1 adjustable-rate mortgages, which offer a fixed interest rate for the first five years before adjusting based on market conditions, were more than 1% lower than fixed-rate mortgages, Fratantoni said. Freddie Mac will release its own data on the 30-year fixed-rate mortgage on Thursday. Mortgage rates were 6.95% as of September 17, Freddie data shows. The 30-year fixed-rate mortgage tends to track the 10-year Treasury yield, which has risen in recent weeks as investors worry about inflation, government debt and higher borrowing costs. Last week, the Federal Reserve announced it would raise interest rates by a quarter percentage point, a long-awaited move that some lenders factored into rates, Jake Krimmel, senior economist at Realtor.com, previously told CBS News. The 10-year Treasury bond was around 5% on Wednesday, up more than a percentage point since the war in Iran began in late February. The real estate market typically slows down as the summer season ends. However, higher rates could further cripple activity as buyers face higher borrowing costs. “While the pipeline of potential homebuyers remains large, affordability challenges and rate volatility could stall origination growth, particularly if elevated rates persist,” Richard Shane, head of consumer and specialty finance research at JP Morgan, said in a July post. Edited by Aimee Picchi More from CBS News Go deeper with The Free Press In:
