30-year mortgage rates just hit their highest point in over a year, and relief may be weeks away
The average 30-year fixed-rate mortgage climbed to 6.76% for the week ending September 10, its highest level in more than 14 months, as surging Treasury yields and mounting inflation fears pushed borrowing costs deeper into difficult territory for buyers and brokers alike.
The reading, reported Thursday by Freddie Mac, marked a five-basis-point increase from 6.71% the prior week and extended a three-week streak of consecutive gains. One year ago, the benchmark rate stood at 6.35%.
"Aspiring buyers should remember shopping around for the best mortgage rate and getting multiple quotes can potentially save them thousands," said Sam Khater, Freddie Mac's chief economist.
The 15-year fixed-rate mortgage — often favored by refinancers — also climbed, reaching 6.09% from 6.04% the prior week, compared with 5.50% a year ago.
Bond markets put the pressure on
Thursday's rate move closely tracked a climb in the 10-year Treasury yield, which reached 4.92%, the highest level since November 2023.
The benchmark note is a direct driver of fixed mortgage pricing, with the 30-year rate typically running roughly two percentage points above it.
The surge reflects a convergence of pressures that has weighed on the housing market since late February: oil prices exceeding $100 a barrel amid ongoing US-Iran hostilities, persistent inflation expectations, and investor concern over the scale of federal debt.
Fed decision looms over the market
With Friday's Consumer Price Index (CPI) release on deck, financial markets are watching closely ahead of the Federal Open Market Committee's (FOMC) September 15–16 meeting. CME FedWatch priced in approximately 70% probability of a rate hike at that meeting as of Thursday.
With rate relief elusive, Melissa Cohn, regional vice president at William Raveis Mortgage and a 44-year industry veteran, is putting forward an argument that cuts against conventional expectations: a Fed rate hike could actually push mortgage rates lower.
Her reasoning is rooted in bond market psychology. Inflation remains well above the Fed's 2% target, and Cohn argues that a decisive move to tighten would signal to bond traders that the central bank is serious, restoring confidence in longer-dated Treasurys and pulling yields down with it.
"A rate hike would probably be necessary, and I believe that when or if the Fed does raise rates, they'll put their money where their mouth is about fighting inflation," Cohn said.
August's payrolls report came in above consensus at 162,000, with prior months revised upward, but the strong employment print did little to shift hike expectations.
Traders have been pricing in tighter policy since oil first cracked $100 a barrel in late July. Mike Fratantoni, SVP and chief economist at the Mortgage Bankers Association (MBA), previously told Mortgage Professional America that three FOMC dissents in favor of an immediate hike at the August meeting signal that "the Fed is likely moving into a hiking cycle soon."
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