Mortgage rates rise to their highest level in a year
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The sell-off in bonds has made it more expensive to buy a house.
Driving the news: The average rate on a 30-year fixed-rate mortgage rose to 6.81% last week, the Mortgage Bankers Association said Wednesday morning, the highest in a year. Mortgage applications fell 2.9%.
- It reflects a surge in global bond yields.
- Longer-term rates moved higher after Federal Reserve chairman Kevin Warsh offered little guidance as to whether or when the Fed may raise rates to combat elevated inflation.
- That has particularly cut into refinancing activity, the MBA said, with its Refinance Index falling 1.9%.
What they're saying: "Application volume for both refinance and purchase loans declined for the week, and are now running behind last year's pace, indicating that higher mortgage rates have weakened overall demand," Mike Fratantoni, MBA's chief economist, said in the release.
Yes, but: Bond yields and mortgage rates have both eased some this week amid a de-escalation of the Iran war.
- Mortgage News Daily, which updates an average rate each day, put the 30-year rate at 6.75% Tuesday, down from 6.82% at the start of the week.
Of note: Spreads between longer-term bond yields and retail mortgage rates have fallen significantly in the last few years.
- The gap between average 30-year mortgage rates and the 10-year Treasury yield has been around 2 percentage points this year. It approached 3 percentage points in 2023.
