Mortgage Rates Hold at 7.40% — Highest Since Nov 2023, Ending a Seven-Week Climb — as Existing-Home Sales Crawl at 3.99M and Buyers Flee to ARMs (10.5% of Applications, a One-Year High)
Update (Oct 15–16, Freddie Mac weekly + NAR existing-home sales): The mortgage climb paused — barely. The 30-year fixed held unchanged at 7.40% (Freddie Mac, Thursday), "its highest level in nearly three years" — highest since Nov 16, 2023 (7.44%) — versus 6.27% a year ago, ending "a seven-week climb." The 15-year eased to 6.71%. The pause tracks the long end: the 10-year Treasury yield "pulled back from its highest level since 2002" to 5.10% at midday Thursday after topping 5.30% earlier this month — "still well above its 3.97% level from before the war with Iran began" (AP). AP's arithmetic on the household bill: the 1.42-point rise since late February "translates roughly into an additional monthly cost of $376 for a borrower financing a $400,000 home loan."
Demand keeps rolling over: MBA mortgage applications fell 2.7% last week, and buyers are reaching for ARMs — 10.5% of all applications, the highest share in a year. NAR reported September existing-home sales rose 1.5% m/m to a 3.99 million SAAR with inventory at 1.60 million homes — a monthly uptick that still left sales "slowed compared to a year earlier amid rising mortgage rates and home prices" (AP), i.e., the market remains stuck at 30-year-low volumes. Jiayi Xu, senior economist at Realtor.com: "mortgage rates are unlikely to ease anytime soon, but bringing inflation under control would pave the way for lower rates and a much-needed boost to affordability for the year ahead."
The rate path is now hostage to the Fed's December decision: per CME data cited by AP, December hike odds have jumped to 64.6% from 49.9% a month ago after the hot CPI/PPI week (see September CPI: Headline Jumps to 3.7% y/y on a 9.1% Gasoline Spike — Core Picks Up to 2.6% as Pressure Broadens Past Energy, and Real Wages Fall for a Second Straight Month, October Hike Odds Collapse to ~15% After Warsh's Bangkok Non-Signal and Jefferson/Williams "Comfortable Holding" Remarks — Goldman Calls the Pause; December Is Now the Priced Hike (64.6%)). Fannie Mae projects the 30-year will average 7.4% in Q4 2026 and 7.5% in 2027. Backdrop from the prior revision (Sept 25): August new-home sales hit an eight-month high of 684K SAAR — but only on builder price cuts and rate buydowns.