Mortgage rates rise to their highest levels since September

Mortgage rates rose to their highest level since September on Friday as bond yields rose due to the war in Iran.

The average interest rate on a 30-year fixed loan is 6.41%, according to Mortgage News Daily. This is the highest rate since the first week of September, but still lower than the 6.78% achieved at the same time last year.

Mortgage rates generally track the yield on the 10-year US Treasury note, which rose again on Friday.

“This is counterintuitive to those who expect bonds to act as a safe haven in times of uncertainty, but when a war has a direct impact on inflation expectations, that is more than enough to offset any of the safe haven benefits that might otherwise be seen,” wrote Matthew Graham, chief operating officer at Mortgage News Daily.

Even as interest rates began rising last week, mortgage demand from homebuyers rose, according to the Mortgage Bankers Association, but a new rise this week could put a damper on the spring season, which is already suffering from another major headwind.

Lenar, One of the nation’s largest homebuilders reported disappointing first-quarter earnings. Its chief executive, Stuart Miller, described broader market headwinds as including “higher mortgage rates, constrained affordability, cautious consumer sentiment and geopolitical uncertainty, especially now including the recent conflict in Iran”.

Just two weeks ago, interest rates fell to match multi-year lows, briefly touching 5.99%. Now, any savings from those low rates are gone.

For someone buying a $400,000 home, about the national average, with a 20% down on a 30-year fixed mortgage, the monthly payment is now about $115 higher than it was two weeks ago.