Following the Fed’s decision to raise interest rates, the 10-year Treasury yield averaged 4.94%.
“Yields climbed as bond markets priced in a Federal Reserve rate hike ahead of the September FOMC meeting, while weak demand at Treasury auctions added further upward pressure,” said Catherine Koh, Economist at the National Association of Home Builders. “Broader concerns over elevated oil prices and geopolitical tensions, the U.S. fiscal deficit, and strong competition for capital from AI and hyperscaler investment also contributed to the rise in long-term yields.
The 30-year fixed mortgage rate continued to jump and averaged 6.86% in September before climbing to 7% before the month ended. Compared to a year ago, this is higher by 51 bps.
For mortgage rates to be consistently elevated to the 7% threshold, the gains in affordability are effectively weakened. This continues to put pressure on the entry-level market and on builders to offer incentives like rate-buydowns.
However, the 30-year fixed mortgage rate has still not recorded a level past the most recent peak of 7.62% in October 2023.
