The 10-year Treasury yield continued its climb, and as a result, mortgage rates rose 25 basis points this past week to their highest point since November 2022, Freddie Mac said.
Thursday morning, the 10-year increased to its highest point since April 2002. This happened even as the Personal Consumer Expenditures Price Index annual increase was lower than expected.
For mortgage lenders, this means rates are not likely to come down anytime soon, although as Hector Amendola, the president of mortgage lender SimplyPMG put it, "Nobody knows where rates are headed going into next year, and anyone who tells you they do is selling something." This is the message to give when discussing the topic.
But the rising rate environment made a significant
On Wednesday, the yield, one of the mechanisms used to price 30-year fixed rate mortgages, closed at 5.29%. This means over the month of September, it increased by 53 basis points.
At one point Thursday morning, the 10-year was up to 5.34%, although by 11 a.m., it was back down to 5.3% and 45 minutes after this, it was 5.26%.
But the broader result of the hike was the Freddie Primary Mortgage Market Survey reporting the 30-year fixed rate mortgage was at 7.28% as of Oct. 1. This
The last time the 30-year FRM was above this level was
The 15-year FRM reached 6.6%, up from last week when it averaged 6.42%. A year ago it was at 5.55%.
Observers' take on mortgage rates this week
Sam Khater, Freddie Mac's chief economist, took an optimistic view of the data in his statement. "With mortgage rates on their current trajectory, the housing market continues to be supported by favorable economic conditions."
Other observers were not as kind.
"Slightly softer than expected PCE data and dovish public comments from Fed officials have dropped the odds of a rate cut later this month, but try telling that to mortgage rates," said Kate Wood, NerdWallet's lending expert, in a Thursday morning comment.
"More importantly though, the larger forces affecting bond yields aren't going away any time soon," and this is driving up mortgage rates, she said.
Investors are looking at inflation, and even with the good news that the PCE was lower than expected at 3.4% year-over-year for August, yields have been pushing upward; the caveat to this month's inflation data is the Bureau of Economic Analysis changed its methodology for calculating portions of the index.
Meanwhile, expectations for an increase in the fed funds rate at the Federal Open Market Committee meeting in October have been shifting. As of Thursday morning, only 33.8% expect a 25 basis point hike, a drop off by more than half from a week ago when 68.6% did, CME FedWatch said.
But for December, 59.7% are looking at a 25 basis point hike, while 26.9% are anticipating a 50 basis point push.
Mortgage rates now expected to stay over 7% this year
With these climbing bond yields, things could be a lot worse, Kara Ng, senior economist at Zillow Home Loans pointed out in a Wednesday evening commentary.
"A compressed spread between Treasury yields and mortgage rates has softened the blow — rates would be worse if that gap widened to 2024 or 2025 levels," Ng said. "But that means there's a limit to how much additional relief compressed spreads can offer — it's the rise across broader bond yields that's hindering the homebuyer."
Zillow has increased its outlook for the 30-year FRM, pushing it to 7.1% by year-end. Mid-September forecasts from both Fannie Mae and the Mortgage Bankers Association have the 30-year
Much of the discussion in the market has been will mortgage rates climb to 8% soon? Lender Price data on the National Mortgage News website Thursday morning had the 30-year FRM at 7.846%; as of late this tracker has been running higher than others.
Optimal Blue put the conforming 30-year FRM at 7.386% for Sept. 30. This is a gain of 68 basis points from the end of August.
The MBA's Weekly Application Survey data as of Sept. 25, had the conforming 30-year FRM at 7.3%, its highest point since November 2023, Joel Kan, deputy chief economist, said in a press release. This rate tracker has increased for six weeks in a row.
This rate was up 18 basis points from the prior week. The 5/1 adjustable actually had a larger increase at 37 basis points, but was much lower at 6.47%.
"ARM loans, with rates around 80 basis points lower than fixed rate loans, accounted for 10.3% of applications, the highest share since October 2025," Kan said.
The 9% mortgage rate discussion
During the week, Selma Hepp, the chief economist at Cotality, speaking on CNBC, while declaring it was not the base-case scenario, rising Treasury yields could push mortgage rates close to 9%. But this was the headline consumers saw although in the interview, Hepp did not make any comments which supported this scenario.
It was just two years ago Amendola was having conversations regarding when the 30-year FRM would go back to 5%.
"Now people are asking me about 8%, and this week, I've heard 9% floated," Amendola said. "Fair enough, the number keeps moving, but the advice doesn't," referring to his comment about rate prognostication.
