Mortgage rates for September 18: Rates hit 23-year high

Even though the Fed chose to hold rates steady this week, mortgage rates skyrocketed.

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The 10-second guide to mortgage rates this week

  • The average for a 30-year fixed rate mortgage was 7.39% as of September 22, down a few base points from the 23-year high it reached the day before.
  • The Federal Reserve paused its rate-hiking streak to give the economy time to react to various factors.

Homebuyers continue to face one of the most challenging housing markets in decades: The average for a 30-year fixed-rate mortgage hit a 23-year high last week, a month to the day from when it hit the 22-year high.

By the end of the week, rates had come back down ever so slightly, settling at 7.39% on September 22, according to Mortgage News Daily

The surge happened despite a pause from the Federal Reserve in its historically aggressive series of rate hikes, aimed at bringing down inflation. As many analysts predicted, the Fed held the benchmark borrowing rate at 5.25%-5.50%, though it left the door open for another hike this year. 

Stubborn inflation could keep mortgage rates high, even without a rate hike from the Fed. Plus, the Fed indicated that it will likely leave rates elevated for the foreseeable future.

Inflation was up 3.7% in August over 2022 — the second month in a row that it increased after several months of more encouraging data. The Fed’s goal is to bring inflation down to 2%. Jobless claims last week were also at their lowest since January, another sign that the economy is still chugging along at a healthy pace. 

Thirty-year rates weren’t the only ones jolted by the economic news. The average 15-year fixed-rate mortgage went up to 6.71%, according to Mortgage News Daily. The average for a jumbo mortgage is 7.424%, while the average for a 5/1 ARM is 7.13%. 

Mortgage rate trends

Mortgage rates are more than double what they were during the pandemic housing boom. These rates closely track the 10-year Treasury yield, which goes up with the federal funds rate. After the Fed’s rate announcement on Wednesday, the 10-year Treasury yield rose 15 basis points to 4.492%, the highest it’s been since 2007.

Back in June, the Fed projected four rate cuts in 2024. The economy has proven to be more resilient than expected, however, with inflation still well above the Fed’s target. It’s now revised its projections to two rate cuts in 2024, which means the 10-year Treasury will likely stay elevated for quite some time — and so will mortgage rates.

Housing market trends

Existing home sales were down 15.3% in August from the year before, according to the National Association of Realtors report released last week. It’s a continued result of the inventory squeeze that’s plagued the spring and summer homebuying seasons. Indeed, total housing inventory was down 14.1% from the previous year.

All that being said, home sales have remained relatively stable recently, month-to-month. While all regions of the U.S. experienced at least modest declines in August, sales were the most brisk in the Midwest, unchanged in the Northeast, and slower in the South and West.

“Mortgage rate changes will have a big impact over the short run, while job gains will have a steady, positive impact over the long run,” said Lawrence Yun, NAR’s chief economist. 

After falling to 28-year lows in recent weeks, mortgage applications jumped 5.4% for the week ending September 15 — during a pocket of time when rates fell slightly from recent highs.

“The average loan size on a purchase application was $416,800, the highest level in six weeks,” said Joel Kan, vice president and deputy chief economist at the Mortgage Bankers Association. “Home prices in many markets have been supported by low inventory and resilient housing demand for available homes.”

If you find yourself needing to move now, even as rates reach multi-decade highs, real estate pros have an adage for you: “marry the house, date the rate.” Translation: If you see your dream home now, you don’t necessarily have to walk away just because mortgage rates are high. You can always refinance once rates drop. 

Just a three-quarter point decline is enough to make refinancing worth it. And, as you look for the best possible rate right now, make sure you compare offers among multiple lenders. Just getting quotes from four lenders can save you up to $1,200 every year on your mortgage, according to a study by Freddie Mac. 

30-year fixed mortgage interest rates

On average, the interest rate for a 30-year mortgage on September 22 was 7.39%, up from 7.29% on September 15. 

15-year fixed mortgage interest rates

On average, the interest rate for a 15-year mortgage on September 22 was 6.71%, up from 6.64% on September 15. 

Jumbo mortgage interest rates

On average, the interest rate for a 30-year fixed rate jumbo mortgage on September 22 was 7.42%, up from 7.34% on September 15. 

5/1 adjustable-rate mortgages

On average, the interest rate for a 5/1 ARM on September 22 was 7.13%, up from 7.09% on September 15.

What determines mortgage rates?

Mortgage rates are influenced by a variety of factors, including:

  • Your credit score
  • Down payment
  • Your debt-to-income ratio (DTI)
  • The type of loan you’re getting
  • Loan term
  • Interest rate type (fixed vs. adjustable)
  • Inflation and the overall economy
  • The Federal Reserve (which doesn’t set mortgage rates, but it certainly influences them)

APR vs. interest rate

If you’re currently shopping for a mortgage or considering refinancing, you’ve probably wondered why the quoted interest rate isn’t the same as the APR. That’s because the loan’s interest rate is what you pay the lender to borrow the money, while the APR (annual percentage rate) encompasses both the interest rate and all loan-related fees. Loan-related fees can include:

  • Mortgage broker fees
  • Loan origination fees
  • Mortgage insurance premiums
  • Some closing costs

The APR, therefore, is a truer measure of what it will actually cost you to borrow money to buy a home.

Editorial Disclosure: All articles are prepared by editorial staff and contributors. Opinions expressed therein are solely those of the editorial team and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in this article is accurate as of the date of the publish. Check the lender’s website for the most current information.

This article was originally published on and reviewed by Lauren Williamson, who serves as the Home and Financial Services Editor for the Hearst E-Commerce team. Email her at [email protected].

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