Rising mortgage rates cause surge in demand for riskier loans
CNBC • • business
Key Points:
- Mortgage rates increased last week, with the average rate for 30-year fixed mortgages rising to 6.56%, the highest in seven weeks, leading to a 2.3% drop in total mortgage application volume.
- Higher rates and inflation concerns, including rising fuel costs and global public debt, contributed to increased Treasury yields, influencing mortgage rate hikes.
- Demand for adjustable-rate mortgages (ARMs), which are riskier due to rate resets, rose to nearly 10% of total applications, the highest since October 2025, with the average five-year ARM rate at 5.76%.
- Applications for home purchase mortgages declined 4% week-over-week and were only 8% higher than the previous year, when rates were closer to 7%.