NEW YORK, NY — Mortgage rates moved back above 7% for the first time in more than a year after a sharp bond market selloff rippled through lending markets. Mortgage News Daily said the average rate reached 7.07% on Thursday, up 10 basis points from the prior day.
The move came as investors reacted to rising oil prices, a fresh inflation reading and comments from President Trump about a possible $5,000 payment to every adult if Republicans keep control of Congress. Treasury yields, which mortgage rates closely follow, also jumped again.
Treasury yields pushed higher as markets priced in inflation risk
The 10-year Treasury yield rose 8 basis points on Thursday to more than 4.9%, a new multi-year high. That matters because mortgage lenders use Treasury markets as a major guide when setting borrowing costs for homebuyers and people looking to refinance.
In recent days, the 10-year yield has climbed more than 12 basis points in less than a week. The Treasury Department tried to slow the rise by increasing bond buybacks, but the effort had little visible effect on yields.
Oil above $100 and producer prices added to market anxiety
Investors grew more concerned about inflation after oil prices moved above $100 a barrel for the first time since May. The jump came during escalating fighting between the United States and Iran, adding another layer of uncertainty to already volatile markets.
New federal data released Thursday showed producer prices increased 0.4% in August. That matched economists’ expectations, but it was still stronger than July’s 0.1% gain and reinforced worries that price pressures are not easing quickly.
Realtor.com senior economist Anthony Smith said renewed tensions have followed the same pattern since late February: oil rises, inflation fears follow and bond markets reprice. That chain reaction has been one of the main forces driving mortgage rates higher.
A Trump promise and debt concerns also weighed on bonds
The bond selloff also accelerated after Trump said he would send $5,000 to every U.S. adult if Republicans keep their House and Senate majorities in the midterm elections. Analysts described the idea as a long shot because it would need legal approval and congressional backing before it could become law.
Even so, the proposal raised fresh questions for investors about federal borrowing. A program of that size could cost about $1.3 trillion, at a time when concern is already growing over the country’s $40 trillion debt load.
Freddie Mac and Zillow showed different snapshots of today’s rates
Freddie Mac’s weekly survey, which runs through Wednesday, showed a smaller increase than the daily market measures. The company said the average 30-year fixed mortgage rate rose to 6.76% this week from 6.71% last week.
Zillow’s Thursday national averages showed a 30-year fixed purchase mortgage at 6.64% and a 30-year refinance loan at 6.81%. Other purchase rates included 15-year fixed loans at 6.04% and 7/1 adjustable-rate mortgages at 6.52%.
For refinancing, Zillow listed 15-year fixed loans at 6.09% and 5/1 adjustable-rate loans at 6.46%. The figures are national averages rounded to the nearest hundredth, so actual offers can vary by lender and borrower profile.
Borrowers are being told to shop carefully and watch the monthly payment
The latest numbers matter most for households trying to gauge what they can afford each month. Yahoo Finance’s mortgage calculator points buyers toward the full picture, including principal, interest, private mortgage insurance and HOA dues if those costs apply.
Mortgage pricing still depends on a mix of personal and economic factors. Lenders generally give better rates to borrowers with stronger credit, lower debt-to-income ratios and larger down payments, while broader conditions in the economy can push rates up or down.
That is why even small changes in Treasury yields can quickly show up in home loans. For now, the market is signaling that borrowers may face higher costs unless inflation and bond-market pressure begin to ease.
More on what homes, rents and new builds are doing near you, on RHS Commoner.
