Mortgage Rates Up

Mortgage rates slightly inched up this week, remaining near their highest level since 2000, according to Bankrate’s national survey.

The average rate on 30-year fixed mortgages ticked up to 7.42 percent this week from 7.41 percent last week, according to Bankrate’s weekly national survey of large lenders.

The average rate on 30-year home loans last topped this level in December 2000, according to Bankrate research. That was before the Sept. 11 terror attacks led the Federal Reserve to slash interest rates, and well before the Great Recession spurred the Fed to keep rates low.

While mortgage rates briefly breached 7 percent in late 2022, they pulled back this year as the smart money bet on an economic downturn. The sharp reversal in mortgage rates reflects a variety of factors: a resilient U.S. economy, the Fed’s ongoing war on inflation and the dwindling chances of a recession.

What happened to mortgage rates this week

The 30-year fixed mortgages in this week’s survey had an average total of 0.31 discount and origination points.

Over the past 52 weeks, the benchmark 30-year fixed-rate mortgage has averaged 6.8 percent. A year ago, the 30-year fixed-rate mortgage was 6.35 percent. Four weeks ago, that rate was 7.31 percent. The 30-year fixed-rate average for this week is 1.12 percentage points higher than the 52-week low of 6.3 percent.

As for other loans:

How mortgage rates affect home affordability

The national median family income for 2023 is $96,300, according to the U.S. Department of Housing and Urban Development, and the median price of an existing home sold in July 2023 was $406,700, according to the National Association of Realtors. Based on a 20 percent down payment and a mortgage rate of 7.42 percent, the monthly payment of $2,257 amounts to 28 percent of the typical family’s monthly income.

A year ago, the median family income was $90,000, the median home price was $399,200 and the average mortgage rate was 5.63 percent. Buying the typical home then required 25 percent of a family’s monthly income.

The sharp rise in mortgage rates has squeezed affordability and sparked a slowdown in home sales. First-time buyers are especially challenged by this market. Home prices haven’t fallen significantly — and values are unlikely to decline, given the shortage of homes for sale. Facing this affordability crunch, some borrowers are opting for ARMs now, even though the savings are small.

There is a possibility that home prices finally could take a breather, says Lisa Sturtevant, chief economist at Bright MLS, a large listing service in the Mid-Atlantic region. “We may be at a tipping point this fall where buyers bow out of the market amidst record low affordability and mortgage rates at a near two-decade high,” she says. “With a contraction in demand, expect home prices to fall in some markets. Supply will still be low, however, so price declines likely will be modest.”

Where mortgage rates are headed

Economists expected to see mortgage rates decrease by the end of 2023 as the Fed’s round of rate hikes draws to an end, but the strength of the U.S. economy has thrown a wrinkle into those expectations.

“We are at this critical juncture,” says Lawrence Yun, chief economist at the National Association of Realtors. “[Mortgage rates] can either break higher, up to 8 percent, or lower, to 6.5 percent.”

Mortgage rates remain chained to inflation, a metric the Fed has been moving to control. At its September meeting, the central bank opted to keep rates unchanged. While the Fed doesn’t directly set fixed mortgage rates, it does set the tone — and as the central bank has boosted its policy rate from zero in early 2022 to 5.25 percent now, mortgage rates have followed suit.


The national survey of large lenders is conducted weekly. To conduct the National Average survey, Bankrate obtains rate information from the 10 largest banks and thrifts in 10 large U.S. markets. In the national survey, our Market Analysis team gathers rates and/or yields on banking deposits, loans and mortgages. We’ve conducted this survey in the same manner for more than 30 years, and because it’s consistently done the way it is, it gives an accurate national apples-to-apples comparison. Our rates differ from other national surveys, in particular Freddie Mac’s weekly published rates. Each week Freddie Mac surveys lenders on the rates and points based on first-lien prime conventional conforming home purchase mortgages with a loan-to-value of 80 percent. “Lenders surveyed each week are a mix of lender types — thrifts, credit unions, commercial banks and mortgage lending companies — is roughly proportional to the level of mortgage business that each type commands nationwide,” according to Freddie Mac.