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Mortgage Rates Hit 3-Year Highs, Locking Homeowners
13 Oct
Summary
- Thirty-year mortgage rates reached 7.4%, a near three-year peak.
- Rising US Treasury yields are linked to oil price spikes and Fed hikes.
- Homeowners are hesitant to refinance due to elevated mortgage rates.
As of 2026-10-13T20:06:15+00:00, 30-year mortgage rates have climbed to 7.4%, marking a nearly three-year high. This surge is attributed to a significant rise in US 10-year Treasury yields, which have increased by approximately 130 basis points since late February. Thirty-year yields have also climbed about 100 basis points in the same period.
The increased yields are fueled by expectations of multiple Federal Reserve rate hikes over the next 12 months, stemming from a war-driven oil price spike. This situation is causing many homeowners to remain locked into their current loans, as refinancing has become less appealing compared to periods with declining rates.
Mortgage-backed securities (MBS) are becoming more sensitive to yield movements. Investors are engaging in convexity hedging, which involves selling Treasury futures or buying interest rate swaps. This activity adds selling pressure to an already strained bond market, though its overall impact may be less than in prior selloffs.
Analysts note that MBS have underperformed Treasuries with comparable duration, a sign of increased hedging activity. However, the extent to which these hedging flows contribute to the broader yield increase is debated. Some experts suggest that as more mortgages become 'out of the money,' their sensitivity to rate changes diminishes, potentially stabilizing the market.
