Mortgage Rates Surge Past 7% as Fed Hike Odds Rise

The average 30-year mortgage rate has hit 7.07%, its highest level in over 15 months, just as traders are giving the Federal Reserve a chance of raising rates again on September 16.

This sudden move comes as the bond market is driving up borrowing costs, with the 10-year Treasury yield reaching 4.92%, its highest since late 2023. The increased demand for compensation due to inflation risk is causing lenders to pass on higher rates to borrowers.

The sharp rise in mortgage rates is a concern for the housing market, which was already weak before this latest jump. Existing-home sales fell 2% in August, and more expensive financing will only make it harder for buyers to afford homes.