Mortgage rates approach 3-year high as new applications plunge
Summary
Mortgage rates have risen sharply, reaching their highest level in nearly three years at over 7%. This increase is causing mortgage applications to drop significantly as homebuyers find it harder to afford loans, and some sellers are lowering prices to attract buyers.Key Facts
- The average 30-year fixed mortgage rate was 7.28% as of the latest report by Freddie Mac.
- Rates have risen about 0.94 percentage points compared to a year ago and 0.25 points in just the last week.
- Higher rates are linked to rising 10-year Treasury yields, which increased since the start of the Iran war.
- Mortgage applications fell 6% in one week, according to the Mortgage Bankers Association.
- Adjustable-rate mortgages (ARMs) made up 10.3% of applications, the highest share since October 2025.
- Some home builders have started lowering prices to attract buyers amid slower sales.
- Experts expect rates to decrease next year as energy prices fall and the Federal Reserve slows its interest rate increases.
- Capital Economics predicts the average 30-year mortgage rate will be around 6.25% by the end of 2027.
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