By Andrew Miller
Mortgages reached their highest point in nearly three years.
The average rate on a 30-year fixed mortgage climbed to 7.40% this week, the highest since November 2023. A week earlier it was 7.28%.
It may not be finished rising.
For much of the past year, the expectation ran the other way.
Rates had peaked, the story went, and relief was on the way. Instead the number kept moving higher. In the process, buyers who stepped back to wait for a better one have watched it push further up.
The pressure is coming from the bond market. Mortgage rates track the yield on the 10-year Treasury note, which has climbed to a 24-year high.
The war between the United States, Israel, and Iran is feeding the move, pushing energy prices up and inflation worries along with them. Since the fighting began at the end of February, the 30-year rate has risen 142 basis points, roughly 1.4 percentage points.
Higher rates are freezing the market from both ends. They price out buyers on one side, while also keeping owners from selling.
Most homeowners are sitting on mortgages below 5%. Few will trade that for a loan at 7.40%. So they stay put, and listings stay thin.
All of this has prevented prices from coming down the way weak demand would suggest. Supply is shrinking at the same time demand is. The squeeze is worst for starter homes.
“Higher rates are holding back both demand and supply this fall,” said Lisa Sturtevant at Bright MLS, who expects a housing market “stall” and not a “crash,” with little downward pressure on prices.
The result is a market that satisfies almost no one.
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