Mortgage Rates Continued to Rise in September

This post was updated on Oct. 8.

Mortgage rates rose sharply in September and kept rising into early October as multiple factors applied significant upward pressure on U.S. treasury bond yields, a key factor in mortgage rates.

According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.86% in September, up nearly 20 basis points (bps) from August and 51 bps higher than a year ago. Thirty-year fixed mortgage rates spiked near the end of the month, finishing September at 7.03%.

The 15-year mortgage rate averaged 6.20% in September, up 22 bps from August and 70 bps from a year ago.

Mortgage rates rose for a seventh consecutive week in early October. The 30-year fixed rate reached 7.28% on Oct. 1 and 7.40% on Oct. 8, up from 6.30% a year earlier. Fannie Mae reported that the Oct. 8 rate was the highest since November 2023.

The 15-year mortgage rate averaged 6.73% on Oct. 8, up from 6.60% the previous week and 5.53% a year earlier.

The 10-year Treasury yield, a key benchmark for long-term borrowing, jumped 26 bps to an average of 4.94% in September and surpassed 5% toward the end of the month. Economic concerns over elevated oil prices and geopolitical tensions, the U.S. fiscal deficit, and strong competition for capital from AI investment contributed to the rise in long-term yields.

The Federal Reserve raised the federal funds rate by a quarter percentage point at its September meeting, bringing the target range to 3.75% to 4%. The Fed noted that economic activity continued to expand at a solid pace, domestic spending remained resilient, and capital investment was robust, while inflation and uncertainty surrounding geopolitical developments remained elevated.

In his latest economic update, NAHB Chief Economist Dr. Robert Dietz noted that “the recent surge in long-term interest rates adds a warning signal for 2027 and the overall economy.”

Read more detail about recent interest rates in this Eye on Housing post.