The average 30-year fixed-rate mortgage (FRM) increased by 16 basis points to 6.38% this week, rising for a fourth consecutive week and hitting the highest level since early September, according to Freddie Mac. Homebuilding stocks, like D.R. Horton (DHI), Lennar (LEN), and PulteGroup (PHM), are trading lower on the news.
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“The bulk of home activity typically happens between March and October,” said Zillow Home Loans Chief Economist Kara Ng. “The longer it takes for the rate shock to resolve, the more likely transactions would be delayed to next season, offering a repeat of 2025.”
Treasury Yields Rise as Hormuz Closure Sparks Inflation Concerns
The 30-year FRM briefly dropped below 6% in February for the first time since 2022. However, rates rebounded following the closure of the Strait of Hormuz, which sent oil and gas prices surging. This has led to the risk of higher inflation, which in turn has pushed the 10-year Treasury yield higher. The 30-year FRM is closely linked to the 10-year yield.
Furthermore, the Fed is now expected to hold rates steady for the rest of 2026. Earlier this year, the central bank was expected to cut rates twice.