Mortgage Rates Today, Wednesday, September 16: Yup, We’re Over 7%

Indulge me for a moment in memories of 2007. It was a time when gaucho pants were inexplicably cool, Apple was about to release a brand new iPhone and yes, the yield on the 10YT topped 5%. Except oh god, wait — those things are all true now, too.

Mortgage interest rates are generally benchmarked to the yield on the 10-year Treasury note, and yesterday that yield hit its highest level since 2007. So yes, mortgage rates are higher today.

The average interest rate on a 30-year, fixed-rate mortgage rose to 7.02% APR, according to rates provided to NerdWallet by Zillow. This is five basis points higher than yesterday and 23 basis points higher than a week ago. (See our chart below for more specifics.) A basis point is one one-hundredth of a percentage point.

Bond yields have been rising — and pushing up mortgage rates — for a while now. I’ll get into why below the chart.

I mentioned up top that mortgage rates are frequently benchmarked to the yield on the 10-year Treasury note. That means that as the 10YT changes, mortgage rates do, too. It’s not an exact 1:1, though. Mortgage lenders add on a margin above the 10YT yield to account for their costs and the greater risk of mortgages relative to bonds.

Treasury yields have been rising for a while for a bunch of somewhat interrelated reasons. We could go down a lot of rabbit holes here, so I’m just going to summarize a few of the biggest in no particular order.

When money’s worth less, bonds are worth less, too. To understand why, we need to talk about how bonds work.

But bonds aren’t always purchased directly or held until maturity. When investors buy bonds from each other, they’re buying the bond at today’s price, not its issue price.

Here’s the thing. Regardless of what an investor paid for the bond, the issuer is still going to make the same interest payments. The ratio of a bond’s annual interest payment to its current price is what gives us the yield. When bond prices go down, yields go up — the interest payment is being divided by a smaller number.

Government bonds might be the biggest game in town, but they aren’t the only game in town. During an inflationary period some investors are going to ditch bonds entirely for other types of investments. But lately investors are being tempted by corporate bonds, notably those offered by companies that need to raise lots of capital to fund AI development and infrastructure.

From January through July of this year, Alphabet, Amazon, Meta and Oracle issued approximately $132 billion dollars’ worth of bonds, according to global investment group Vanguard. For comparison, in all of 2024, big tech issued roughly $20 billion in bonds. The rise of AI has driven the stock market to new heights this year, but it’s also been a major force in the bond market.

This has pushed up Treasury yields for two related reasons. One is simple supply and demand. The other is what all this investment in AI could mean. If AI lives up to its promises of increased productivity, that growth could drive inflation. Strong inflation could force the Federal Reserve to keep the funds rate high. And I just talked about what inflation does to bonds.

I mentioned above that when you buy a bond, you’re buying a little piece of U.S. government debt. There’s a lot of debt to go around — $40 trillion, as of August.

Historically, Treasury bonds have been one of the safest investments one could make. You’re lending money to the U.S. government, and the U.S. government is about as trustworthy a borrower as you could ever hope to find.

Lately though, the U.S. has been looking a little less scrupulous. The national debt keeps rising and the government keeps spending. Tax increases or spending cuts, both of which could at least try to make a dent in the U.S.’s massive debt, don’t appear to be on the table.

Investors aren’t thinking the U.S. is about to default, but America’s definitely not being super responsible with its cash, either. So the same way that a mortgage lender’s going to offer a higher interest rate to a borrower with shaky finances, investors buying Treasuries are going to demand higher yields to account for that increased risk.

Additionally, more debt means the U.S. issues more Treasuries, so we’re right back into basic supply and demand again.

All of the above’s been sending bond yields higher, and mortgage rates are going along for the ride.

Refinancing might make sense if today’s rates are at least 0.5 to 0.75 of a percentage point lower than your current rate (and if you plan to stay in your home long enough to break even on closing costs).

With rates where they are right now, you could start considering a refi if your current rate is around 7.52% or higher.

There is no universal “right” time to start shopping — what matters is whether you can comfortably afford a mortgage now at today’s rates.

Rate locks protect you from increases while your loan is processed, and with the market forever bouncing around, that peace of mind can be worth it.

In addition to market factors outside of your control, your customized quote depends on your:

Even two people with similar credit scores might get different rates, depending on their overall financial profiles.

Maybe — but even personalized rate quotes can change until you lock. That’s because lenders adjust pricing multiple times a day in response to market changes.

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