US 30-year mortgage rate climbs to 7.12%, highest since May 2024

The average rate on the most popular US home loan, the 30-year fixed-rate mortgage, rose 15 basis points to 7.12% in the week ended September 18, its highest level since May 2024, according to the Mortgage Bankers Association (MBA).

The increase in mortgage rates is attributed to rising Treasury yields, which are influenced by oil prices and the Federal Reserve's efforts to combat inflation. The Fed recently lifted its policy rate by a quarter of a percentage point to the 3.75%-4.00% range, with policymakers projecting at least one more rate increase by year-end. Traders are also anticipating further Fed hikes.

Rising mortgage rates have put pressure on prospective homebuyers and cooled the US housing market. The MBA reported that the increase last week led to a decline in refinancing and home purchase applications. Consequently, more borrowers are opting for adjustable-rate mortgages (ARMs), which offer lower initial borrowing costs. ARMs constituted 9.8% of mortgage applications last week.