Mortgage rates jumped Thursday as bond yields soared, with the average rate on a 30-year fixed rate reaching 7.45%, according to Mortgage News Daily. Other media outlets, including Freddie Mac, reported Thursday morning that interest rates had just topped 7%, which was the average for the past week.
Interest rates rose Thursday morning in Mortgage News Daily’s daily survey of brokers and lenders, but as the 10-year Treasury yield rose further in the afternoon, a re-run of the survey found rates had risen even more. It rose 19 basis points from the previous day to 7.26%.
“On a daily basis, it topped 7% for the first time on September 10th following the inflation reports we saw last week that increase the risk of a Fed rate hike,” said Matthew Graham, chief operating officer of Mortgage News Daily. “Since then, a combination of Fed comments, rising oil prices, and solid economic data have added to the pain.”
The 30-year fixed rate fell to 5.99% at the end of February, but began to rise once the war with Iran began. Interest rates began to rise further again in early September, especially after the Fed raised its benchmark rate. Mortgage interest rates roughly track the yield on the 10-year U.S. Treasury.
All of this comes as the housing market continues to struggle due to soaring home prices, weak consumer confidence, and a continued shortage of affordable housing.
While there was a reason for this morning’s rally, the afternoon decline in bonds is puzzling.
“There is no clear trigger. Explanation requires inventing a story and then defending it. Today, there is no objective, irrefutable way to connect the dots. The seller…decided to sell a lot,” Graham said.
