WASHINGTON–Mortgage rates continued rising Friday, with the average rate on a 30-year fixed mortgage reached 7.49% Friday, up 0.3 percentage points from the start of the week. The rate was 6.75% on Aug. 26 and crossed 7% around Sept. 10. It remains below the roughly 7.8% peak reached in late 2023.
The rise has come alongside an increase in the yield on 10-year Treasury bonds, which mortgage rates closely track. Yahoo Finance reported that investors have been weighing higher oil prices, inflation and the prospect of further Federal Reserve rate increases. The bond market was calmer Friday than it had been Thursday, but mortgage rates kept climbing.
“A 7% handle is as much psychological as mathematical, and it arrives at the point in the season when leverage usually shifts toward buyers,” Realtor.com senior economist Anthony Smith said in a statement cited by Yahoo Finance. Higher borrowing costs could dampen sales ahead of the housing market’s usual winter slowdown.
Pressure Evident in Down Payments
The pressure was already evident in down payments during the second quarter. The median down payment rose to $27,100 from $23,400 in the first quarter, an increase of nearly 16% that ended four consecutive quarters of declines, Scotsman’s Guide reported, citing Realtor.com data. Even after that quarterly jump, the median amount was 9.2% below a year earlier and the lowest for a second quarter in five years.
Down payments represented 13.7% of the median sale price in the second quarter, compared with 12.9% in the first quarter and 14.3% a year earlier.
“Increasing the amount you put down is one of the few levers buyers have to offset higher rates,” Realtor.com senior economist Hannah Jones told Scotsman’s Guide. A larger down payment reduces the amount borrowed and, in turn, the monthly payment.
Home Price Increases
Jones said seasonal increases in home prices and down payments contributed to the quarterly rise. Higher mortgage rates also appeared to favor buyers able to bring more cash to a purchase, while sidelining some shoppers with tighter budgets. Cooler prices and sluggish demand helped offset some of the pressure, Scotsman’s Guide reported.
The second-quarter figures describe purchases made from April through June; Friday’s mortgage rate reflects a more recent rise in borrowing costs. Jones said down payments could remain elevated in the third quarter if those costs continue to climb.
