US Mortgage Rates Soar Past 7%, Highest Level in Two Years

The average 30-year fixed mortgage rate in the US has reached its highest level in over two years, exceeding 7% for the first time since President Donald Trump's term began. The Mortgage Bankers Association reported that the rate rose to 7.12% in the week ended September 18, surpassing the previous high of May 2024.

The surge in mortgage rates has been attributed to the Federal Reserve's decision to increase short-term interest rates to combat inflation and rising oil prices, which have driven up Treasury yields that underpin residential borrowing costs. The Fed lifted its policy rate by a quarter of a percentage point to the 3.75%-4.00% range last week.

The rise in mortgage rates has led to a decline in refinancing and home purchase applications, with adjustable-rate mortgages becoming increasingly popular as borrowers opt for lower upfront borrowing costs that reset after a number of years.