WHAT YOU NEED TO KNOW
  • The contract rate on a 30 year mortgage rose 12 basis points to 6.97%, its highest level since May 2025.
  • The MBA purchase index slipped 0.8%, while the refinance index plunged 8.8% to its lowest level since May 2025.
  • Mortgage rates have risen significantly since February as higher energy prices fueled inflation concerns.
  • The Federal Reserve was expected to raise interest rates for the first time since 2023.
  • The 10 year US Treasury yield climbed to its highest level in almost two decades.

DISCLAIMER: GoldInvestors.news is not a registered investment, legal or tax advisor or broker/dealer. All investment/financial opinions expressed by GoldInvestors.news are from the personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.

US mortgage rates climbed to their highest level in more than a year last week, delivering another setback to a housing market already struggling with weak activity. The latest increase pushed a key borrowing rate close to the 7% threshold.

The contract rate on a 30 year mortgage rose 12 basis points to 6.97% during the week ended Sept. 11, according to Mortgage Bankers Association data released Wednesday. That marked the highest level since May 2025.

The increase represents a sharp reversal from earlier in the year. Mortgage rates had fallen in February to their lowest level since 2022, offering a temporary period of lower borrowing costs before conditions changed.

That February low arrived just before the beginning of the Iran war. Since then, mortgage rates have moved significantly higher, with rising energy prices contributing to concerns about inflation.

MORE NEWS: Gold Roars Near Session Highs at $4,340 an Ounce as August Retail Sales Jump 1.2%

Those inflation concerns have carried consequences for borrowing costs. As mortgage rates escalated, demand for loans weakened, according to the Mortgage Bankers Association figures.

The MBA purchase index, which measures loan applications, edged down 0.8% from the previous week. The decline showed that demand for purchase loans slipped as the contract rate approached 7%.

Refinancing activity suffered a considerably larger decline. The MBA refinance index dropped 8.8%, falling to its lowest point since May 2025.

The two indexes showed pressure across both new purchase applications and refinancing demand. While the purchase measure recorded a modest weekly decline, the fall in refinancing was much steeper.

With the Federal Reserve expected to keep interest rates unchanged this month, do you think interest rates should remain where they are instead of being cut?

By completing the poll, you agree to receive emails from Gold Investors News, occasional offers from our partners and that you've read and agree to our privacy policy and legal statement.

The rate increase arrived as investors and borrowers awaited a major Federal Reserve decision. On Wednesday, the central bank was expected to raise interest rates for the first time since 2023 as part of its effort to restrain inflation.

A Federal Reserve increase would not directly determine mortgage rates. However, the decision could reverberate throughout bond markets, where changing yields can influence the borrowing environment tied to residential loans.

Mortgage rates closely track the yield on the 10 year US Treasury. That Treasury yield climbed this week to its highest level in almost two decades, adding another major pressure point for mortgage borrowing costs.

The connection to Treasury yields means the housing market is facing strain even though the Federal Reserve decision does not directly set mortgage rates. Bond market moves remain central to the direction of residential financing costs.

Close

MORE NEWS: Fed Poised for First Rate Hike in Three Years as Inflation Pressure Intensifies

The latest mortgage figures came from the MBA survey, which has been conducted every week since 1990. Its results are based on responses collected from mortgage bankers, commercial banks and thrifts.

The survey data cover more than 75% of all retail residential mortgage applications in the US. That coverage includes the purchase and refinance activity captured by the two indexes that declined during the latest reporting week.

The combination of a 6.97% contract rate, weaker purchase applications and an 8.8% refinancing decline marked another difficult turn for the sluggish housing market. Mortgage rates now stand at their highest level since May 2025 after having reached their lowest level since 2022 in February.

Rising energy prices have helped fuel inflation concerns during the subsequent increase in rates. At the same time, the approaching Federal Reserve decision and the surge in the 10 year Treasury yield have placed bond markets at the center of the mortgage outlook.

For borrowers, the latest weekly report showed escalating costs alongside fading demand. The MBA data recorded declines in both tracked application measures as the contract rate moved within a fraction of the 7% mark.

The Federal Reserve’s expected move will not directly change mortgage rates, but its effects could spread through bond markets. With Treasury yields already at their highest in almost two decades, housing finance entered the week under renewed pressure.

DISCLAIMER: GoldInvestors.news is not a registered investment, legal or tax advisor or broker/dealer. All investment/financial opinions expressed by GoldInvestors.news are from the personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.