Hi Reader,

The average 30-year fixed mortgage rate ended the week at 7.43%, up from 7.19% the prior week, according to Mortgage News Daily. Freddie Mac’s weekly survey came in at 7.03%, up from 6.95% the week before (Freddie Mac is an average of the previous week so it tends to lag Mortgage News Daily).

You can see above that we are now at the highest point for mortgage rates since April of 2024 when rates hit 7.45% as they did in the middle of last week before falling to 7.43%. This is off the five-year high of 8.00% we saw in October 2023.

Why the continued rise?

It was another volatile week in the bond market.

​The 10-year Treasury yield ended Friday at 5.18%, up 0.185 percentage point for the week and at a 19-year high. The 30-year Treasury finished at 5.5%, its highest level since June 2004.

Several important dynamics pushed yields higher last week.

1. On Wednesday, a survey of U.S. business activity showed surprisingly resilient growth and continuing inflationary pressure.
2. ​Fed Governor Michael Barr also said he expects additional rate increases​
3. ​A five-year Treasury auction saw weak demand. The 10-year yield rose almost 0.15 percentage point that day to 5.113%.
4. Oil prices have also been playing an unusually large role in the bond market. Brent crude moved back above $100 on Wednesday and rose again Thursday as investors watched developments surrounding the Strait of Hormuz. Higher oil prices have been moving alongside higher Treasury yields.
5. ​By Friday, oil prices declined as reports emerged that U.S. and Iranian negotiators were discussing a deal to reopen the Strait of Hormuz. Treasury yields came off their highs as well. The 10-year had reached 5.228% intraday, its highest level since June 2007, before ending the week at 5.18%.

​
If you were trying to design the perfect environment for higher mortgage rates, this would be pretty close.

Resilient US economy + high inflation/oil prices + weaker demand for government debt + competing debt markets from AI. This all sets the stage for upward pressure on bond yields and specifically the 10-year Treasury which mortgage rates track alongside.

If you want to nerd out a little more on what’s happening with rates, this WSJ Take on the Week episode is a good listen:

It gets into why the 10-year Treasury is so important for mortgage rates, how Fed expectations and oil are pushing yields around, and why demand for Treasuries matters too. It’s a good explainer for how we got here and what the bond market is watching next.

This week, the market will be watching the August PCE inflation report and September jobs report. Stronger-than-expected readings could push Treasury yields even higher.

What is happening in housing?

Since ultimately, we are all on the same page when making a purchase - buyers, sellers, seller's agents, buyer's agents and mortgage professionals - all want the deal done, seller concessions have resurged as an important tool in the toolbox.

​Redfin reports that nearly half of homebuyers get concessions from sellers lately:

Seller concessions can be used for all sorts of things, including buying down the mortgage rate for a year or two and paying for part of a buyer's closing costs, or even home improvements. While seller concessions are more common in Sun Belt areas, they are rising in popularity in areas in the Northeast and Philadelphia.

What can we do for buyers right now?

This is a market where it is particularly important to look beyond one quoted mortgage rate.

If your client already has an offer, send it to me and I will see if I can beat it.

I am also looking at ARM options and alternative loan structures where they make sense for the individual buyer.

FHA is another tool worth understanding in this rate environment. I recently put together a comparison showing how FHA and conventional financing can look side by side. In this case, it did not yield a clear cost advantage, but I am currently doing an FHA cash-out refinance for a buyer where the numbers really made sense.

Take a look at this video and see for yourself:

My approach is not simply to tell a buyer that one strategy or loan type might work. I show them the numbers and the trade-offs side by side so they can understand the options and decide what works for their own goals.

Especially in a difficult rate environment, understanding the choices can be what allows a buyer to continue moving forward.

I hope your week is off to a great start!

-Nicole

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Nicole Hamilton Bernheimer | NMLS #2354049

nicole@homeownering.com, 917-650-0167

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