Zoom: The weekly average 30-year fixed mortgage rate was 7.28% Thursday, Freddie Mac reported.
- This represents an increase of 0.94 points from last year and 0.25 points from last week.
- Mortgage rates closely track 10-year Treasury yields, which have risen more than 1.25 percentage points since the start of the Iran war in February.
The impact: Home loan applications are falling.
- The Mortgage Bankers Association reported Wednesday that applications in the week ended Sept. 25 fell 6% from the previous week.
With prices At their highest level since November 2023, home buyers are starting to turn to variable rate mortgages.
- ARMs made up 10.3% of mortgage applications in the most recent period, marking the highest point since October 2025, according to MBA.
- “Affordability and borrower demand have weakened in recent weeks as the higher interest rate environment continues to put pressure on both potential buyers and homeowners looking to refinance,” MBA CEO Bob Broeksmit said in a statement.
What we’re looking at: There are signs that rising rates could put downward pressure on prices as sellers seek to attract buyers.
- “Softer market conditions and stronger affordability pressures have contributed to increased pricing pressures in many of our markets,” William Hollinger, senior vice president of KB Home, said last week on an earnings conference call, noting that the homebuilder had “made pricing adjustments.”
Reality check: Rates may not stay high for long.
- “We expect the situation to improve next year as energy prices fall and the Fed’s aggressive tightening cycle that has been baked into money markets fails to fully materialize, causing mortgage rates to return to most of their recent increases,” Thomas Ryan, Capital Economics’ senior North America economist, wrote Tuesday.
- Capital Economics projects that 30-year fixed mortgage rates will average 6.25% by the end of 2027.
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