Since February, mortgage rates have surged from 6.00 percent to 7.54 percent.
Chart courtesy of Mortgage News Daily.
Mortgage News Daily numbers are higher, but more accurate than other sources including Freddie Mac because MND includes points and fees in its average rates.
Biggest Weekly Surge in Four Years
The Wall Street Journal reports Mortgage Rates Surge, Notching Largest Weekly Gain in Four Years
The rise to 7.28% follows the bond-market rout and deals another blow to a limping housing market.
[Mish Note: Factoring in points and fees, that’s That’s too low by nearly a quarter point.]
Rates for 30-year fixed-rate mortgages leapt to 7.28% from 7.03%, the biggest jump since October of 2022, according to Freddie Mac.
Mortgage rates are rising as inflation, a surge in government debt and heavy corporate borrowing for the build-out of AI push up bond yields, which move in the opposite direction of bond prices. The bond-market selloff is raising borrowing costs for home buyers and dealing blow after blow to a limping housing market.
“Showings have stopped basically,” said Don Wessel, a real-estate agent in Greenville, S.C. “I’ve got good listings in downtown Greenville, which is one of the hottest areas, and nobody’s looking at them.”
For the week ending Sept. 25, mortgage applications fell 6%, the fourth consecutive week of declines, according to the Mortgage Bankers Association.
At the start of the year, mortgage rates touched below 6%, but the beginning of the war in Iran caused them to jump. As the conflict has drawn on, fears of sticky inflation have driven rates higher and higher. Rates began September at 6.71% before a historic bond selloff sent them surging.
Buyers in the upper end of the market, less constrained by affordability, are continuing to show interest, said Anthony Rael, an agent in Denver. “They seem to be flush with cash, bringing 20%, 30% down payments into the mix,” he said. “Whereas the lower market, let’s just say closer to a half a million and below, is really struggling where we’re getting lots of showings and no activity, no offers.”
[Mish Note: This skew artificially increases median and average home prices. Case Shiller repeat sales of the same home is a better metric.]
Pool of Price Insensitive Buyers
It’s not just the ultra-wealthy.
But as discussed many times over the last two years, there is a pool of price insensitive buyers unconcerned about mortgage rates.
They have stock market gains, high end jobs, or cash at hand and want to move so they do.
Existing Home Sales vs Mortgage Rates
Since November 2022, mortgage rates surged, then declined, and have now risen 1.5 percentage points since February.
Existing-home sales have been relatively flat the entire time.
The stock market and stable jobs support this stalemate. For how long remains to be seen.
Related Posts
September 13, 2026: Existing-Home Sales Drop Two Percent, Gone Nowhere for Four Years
It’s more nowhere for now, but a big caution ahead.
September 17, 2026: Housing Starts Decline 2.6 Percent in August, Overall Weakness Continues
The trends in housing all remain down: starts, permits, completions, and sales.
September 24, 2026: New Home Sales Rebound in August but Housing Remains Stagnant
Housing sales, new and existing, have been comatose for over 3 years.
October 2, 2026: In Big Warning to the Fed, Bond Yields Rise Despite Weak Jobs
The bond market is telling the Fed it wants another interest rate hike.
It is always during terrible happenstances that are manmade that the uber wealthy or top .1% excel. This is why they engineer or facilitate or when presented naturally they adjust and act on them to their benefit. Since the early 20th Century they have been bailed out through the taxpayer for the vast majority of their wars, their cyclical recessions, depressions caused by the economic elites and their manufactured cataclysms or an authentic situation that they grasp and take full advantage of.
To wit: Covid; the deflationary Great Recession and Great Depression; the S&L Crises; The Afghanistan War, the two Iraq Wars, the Iran War, WW I, the Vietnam War, the Korean War, the endless wars in Africa and Latin America through covert means, direct invasion or by proxies; the first and second Oil Crises, the Stagflationary 70s – mid- 80s then the 2020s.
The next manmade one is planned as well. It is occurring before your eyes. All or nearly all bond markets across the globe are signalling something is wrong. The Federal Reserve recently made it worse by raising short-term rates, making it worst except for the banks and the billionaires.
My prediction is once the midterms are over something will break before the new Congress convenes. Trump is then asked to resign by the oligarchs so JD Vance can continue the rape of America by the billionaire tech bros class. If Trump doesn’t comply or isn’t bought off, he is removed by other means with acquiescence by the GOP senators or the Deep State. It is a prediction based upon Peter Thiel’s latest dissatisfaction with Trump and his Cabinet. TBD if I am correct.
The billionaires require a quiescent public to continue their theft. In this way the data centers, AI, finance capitalism, endless wars, etc. can continue since the problem (Trump) has been removed.
Trump was always the shiny object. The billionaires played him like a fiddle.
Rise in rates to 7.28% doesn’t deal a blow to the “housing market”, it deals a much needed reckoning/correction to prices that are too high. It was the too high prices caused by QE – the gov’t “buying” (with money printing) that caused house sales to crash. Mortgage rates are actually still too low. The Federal Reserve still holds $2 Trillion in MBS. Housing sales could get back to normal if the Fed wasn’t still suppressing rates this way, as it would lower prices even more. The rise in rates has cooled prices, more so in some areas than others, and that’s making progress towards returning to sanity and stability/prosperity for future generations. It’s the govt’s continued massive deficit spending, adding $2 trillion a year more to our naional debt, that is providing price support, but that is unsustainable, and a net negative for our long term prosperity, as the deficit spending price support is suppressing sales.
Are we getting tired of calling out another of Trump’s fake promises…and all the people that voted for him as only he was capable of lowering interest rates? What a joke he is. Was just down in FL and noted neighbors no longer have Trump flags. Slow learners but whatever.
We know a High Net Worth (HNW) Couple here in the USA who have their LONG-OWNED Family Estate up for sale. Dad, who is a plumber, built the place himself.
It features a huge pool with a Fountain, 24 acres, a FULL barn, full Metal Building (for his Plumbing Equip, Tractors, etc/) and they grow grapes for an Award-winning White Wine.
They are selling it for MILLIONS to a couple who are selling a RIVER-FRONT PROPERTY for Millions (but less).
The domino effect is in motion: the BUYERS need BUYERS for our friends, the SELLERS to move this estate. He is 70 and needs out (the Estate has worn him out).
We shall see. Just because someone is HNW does not mean it will be a cake walk dumping a big piece of R.E.
agree. many times big properties have to take the biggest haircuts. those kinds of folks, that own a few dozen acres and pool………without the staff to maintain it, are really kind of playing thurston howell the 3rd. maybe they will have to let their butler and pool boy and gardener and maids and drivers go. i grew up partly on gold coast, north shore of LI. lots of old money estates got auctioned off in the 1970s stagflation. after being in the family for 3 or 4 or 5 generations. new money crowd like self made wall street and r/e dudes bought them and ditched most of the help.
I’m strategizing on how to sit out (with my paid up real estate) the recession the GOP will hand off to the Dems. Feeling deja vu from 2006 midterms. But a lot of surrounding conditions have been damaged, a lot of dry powder burned, in interest rate suppression, and freebies since last time.
Maybe the AI slopocalypse will add a wild card.
THIS OUGHT TO HELP R/E PRICES…….COME BACK HOME MPO AND PASS GO AND COLLECT………….In his Friday evening post, the president also repeated a promise he made at the GOP’s midterm convention last month to distribute $5,000 checks to every U.S. adult if the GOP keeps its majority in both legislative chambers this fall.
“Because I delivered on this very important issue for the American People, they can also rest assured the highly popular $5,000 Trump Dividend will be distributed to every U.S. Citizen if, and when, the Republicans win the Midterm Elections!” he wrote.
We are all whores. The only quibble is price.
Why wouldn’t I want someone to borrow money and give it to me? Especially when I’m going to have to pay it back? I already have $5k, I don’t need the liability side.
Since the only quibble is price (which I 100% agree with) then the correct response by the Dems is to say that congress will give out 6000 if they win the mid term elections 🙂
henry kissinger- the illegal we do immediately. the unconstitutional just takes a little more time.
I could be an all cash buyer on 95% of the properties in the US (outside of coastal Cali), but why do it? Property values are dropping slowly. If I wanted to go somewhere else it would be far smarter to rent for a decade or so.
I paid my mortgage off when I was 35. I simply don’t understand people hanging on the mortgages until the are drawing their pensions.
Depends on your rate.
Those of us on 3% and less mortgages are making out like bandits since our cash can earn more than 3% in bonds/TBills never mind the stocks or other investments. So paying off the mortgage would be silly.
For mom and pop real estate investors (a few rental properties) its much better to be financing via a mortgage than paying off the home.
i did wonderful paying cash for investment properties after towns experience crashes. with 20% cap rates and no debt, it’s enough cash flow with zero stress. of course i understand the best way to invest is without one’s personal name on a note. as every honest commercial r/e investor joked with me, “heads i win, tails the bank loses”
with cash offers one can get some screaming deals. i understand one can then finance after the close. but no debt investing is wonderful. it’s not like being a billionaire was ever my goal. hell, in the usa, the lifestyle of a billionaire ain’t different from a common millionaire. hell i felt wonderful when i was a mere thousandaire back in the last century. when a 100USD actually was worth something.
If your goal is to live comfortably as upper middle class then yes, all cash deals are fine and generate decent cash flow.
If your goal is to create generational wealth then all cash deals don’t make near as much sense as buying multiple properties instead of 1 since the ROI (and cash flow) is much higher.
Sounds like you’ve never been divorced.
20 yr at 2.375%, why would I give the bank all that cash when I can make FAR more than 2.375% on it via other investments? I rent 20% of the square footage in our house for weekend AirBnB, that covers 100% of the principle and interest. Do you understand how the rich built their HNW? It isn’t just through the stock market.
Drop the price by 50% and people will show up to look at them. What makes them hot is the selling price not the Realtor’s imagination.
Real Estate is still location, location, location.
If you are in the right location your property will be hot and sold fast. Waterfront in Florida never takes long to sell.
The jump in mortgage rates reminds me of the disintermediation that occurred in the 1966.
“The term credit crunch had its origins in the unusually tight credit conditions that prevailed in the U.S. in the late summer of 1966, when reports of borrowers unable to obtain credit at any price were commonplace. Prior to 1966, the postwar U.S.
experienced 3 periods of tight credit; the spring of 1953; the fall of 1957; and the last third of 1959. These periods were called “credit squeezes” or “credit pinches”.
Sidney Homer and Henry Kaufman, economists at Salomon Brothers in the 1960’s, coined the term “crunch” to describe how the 1966 episode differed from those in the 1950’s. Although Homer and Kaufman did not formally define a crunch, Homer (1966) offered the following explanation:
The words squeeze or pinch have gentle connotations. The prehensile male sometimes “squeezes” or “pinches”, with the most affectionate intentions. No bruises need result, no pain need be inflicted. A “crunch” is different. It is painful by definition, and it can even break bones.”
See: “Identifying Credit Crunches” by Raymond E. Owens and Stacey L. Schreft. Federal Reserve Bank of Richmond, March 1993.
Retail Money Market Funds (WRMFNS) | FRED | St. Louis Fed
Retail MMMFs peak at the beginning of a recession. Interest rates should come down.
From your perspective how much did Reg Q impact the ‘66 so-called credit crunch on thrifts, therefore loss of deposits at the thrifts?
The guns and butter similarity in the mid 60s causing inflation and today’s inflation are different in kind but not effect. The median wage and income small business felt the inflation but debt deflation as it is today causes not only loss of purchasing power but less goods and services purchased, particularly elastic/discretionary.
Loose credit standards and low interest rates bring in speculators and buyers of all sorts. This inflates prices. Higher interest rates and tighter credit standards drive the leveraged out causing defaults and deflation of prices.
Banks sit at the ready to capture the equity within defaulting properties.
Mortgage free properties ride the waves of these cycles without a care.
High interest and bond yields drive investors out of stocks into the relative safety of bonds.
Any questions?
The housing prices cannot hold. The mortgage rate going up 1% could increase the monthly cost of the same property by hundreds on an overpriced $400k bungalow. Wages aren’t growing fast enough
This isn’t the GFC. Monetary flows are still rising whereas in the GFC monetary flows fell bringing down housing prices.
Mish, you are making me want to buy bonds in a big way…either we are already seeing inflation slow down, or we are getting close to breaking something…then maybe we get deflation, as the leverage is absurd. I worked on Wall Street for 30 years, and I can tell you, no one knows how bad this is from a global leverage perspective, not even Bessent…he might know, but he knows telling the truth would not accomplish anything. No way the world grows its way out of this, especially with the idiots governing Europe.
The time to start buying bonds was when king clown got into office. Buy-writing TLT, collecting interest, dividends, and options call premium all the way down. Then profit all the way back up when bond prices rise and keep collecting interest and call premium after the clown kills the economy.
Now is a good time to start loading up on Euros as the dollar rises. I’m waiting for the next fed meeting. If it’s a hike, its a go for FXE and maybe some futures contracts. Of course, I need euros for when I’m in Europe so great way to hedge.
Why do you need Euro’s when you are in Europe?
Everything these days is bought with credit/debit card minus some low value cash transactions.
If the dollar is rising vs the Euro you want to own dollars since your dollars will buy more when you are in Europe.
Sellers better be prepared to get less than they expected.
How can anyone give this a down vote, its blindingly obvious, jeez there’s some morons on here.
I hope house prices halve here personally, and if they halve again even better.
A house is a home not an investment.
I wondered about that too, from time to time. My guess is someone “ignores” other readers but downvotes every comment from them.
I think you’re right! I was reading the comments in other articles after seeing this, and noticed every post by Sentient has a negative vote. Sentient probably posted something a passive aggressive reader took personally, so that reader spends all his time here downvoting everything Sentient says.
This reminds me of a Dostoevsky novella called Notes From Underground (https://www.gutenberg.org/ebooks/600) in which the main character is walking down the street when a strong confident man walks his direction down the street, expecting him to move aside, which he does. He spends months preparing for the next encounter with this same man, when he tells himself he will not yield. Of course when he meets him again he steps aside again. Human psychology is fascinating, and Dostoevsky is one of the best at examining it in fiction.
You might wish that just like I wish for a million dollars and world peace.
But they can’t halve and then halve again because you can’t even build for 1/4 of todays prices. Most can’t be built for half their current price.
There is a general rule that for every 1% increase in the 30 yr mortgage rate there should be a 10% drop in price.
So figure all time high was around late 2021/early 2022 with a 3% mortgage rate, hence prices should drop 40% if the mortgage rate is 7%.
Factor in or account for household income increasing about 20% since then, so calculate 40% x 0.8.
Housing should drop 32% from the all time high around late 2021.
I’ve seen Florida panhandle townhomes selling at 25% discount from 2021 all time high when the 30 yr mortgage rate was 6.5%.
At least offer to buy 4 discount points for the buyers mortgage as that is like lowering the price 10%, yet it only costs 4% of the mortgage.
Lots of people talk about the residential real estate market but the commercial real estate market is on its last legs. No more extend and pretend on 1.5 trillion in loans. When the AI bond bubble bursts, I think it will take down CRE with it.
https://cred-iq.com/blog/2026/09/24/office-special-servicing-hits-a-new-high-as-more-loans-transfer-before-default/
which mortgage reits or banks…….do you like here, for shorting ? i agree in most of usa, commercial RE is a problem. some towns like NYC, which is unique seem to be alright. many of my pals there are back to the office past year or so after the covid flight to home working.
I sold off all reits, including by beloved “O” (reality income) except for ILPT because its industrial and that’s one thing that *may* do well if we ever start becoming self-sufficient in rare earths and other industrial goods.
ILPT is a wildcard so don’t go off buying it because I own it. It can easily go bankrupt if it can’t meet its debt obligations. It’s a relatively small position.
Until we get major corrections to real estate (of all kinds), I don’t want to touch it with a 10 foot pole. Maintenance, Insurance and Taxes are all real estate cancers but the real killer is uncontrollable debt loads.
Commercial market is hot in South Florida. Multi-billion dollar deals popping up a couple of times per week. Those hedge fund guys are buying & building like crazy.
“Let them eat cake”. When the wheels come off the price of homes.
Don’t assume that a reverse mortgage is the answer.
honest question. how is the market price per foot down there. which direction is that trending.??
AI search seems to confirm your snippet. https://www.google.com/search?q=what+is+the+direction+of+commercial+r%2Fe+sq+foot+pricing+in+south+florida+trending&sca_esv=4be001bcccb8dfeb&sxsrf=APpeQnui_xgPDlGeINkHJAFLnsDgeVtS8g%3A1791037897168&ei=yRHBatjtCaDk5NoPyrSQ4AI&biw=1720&bih=659&uact=5&oq=what+is+the+direction+of+commercial+r%2Fe+sq+foot+pricing+in+south+florida+trending&gs_lp=Egxnd3Mtd2l6LXNlcnAiUXdoYXQgaXMgdGhlIGRpcmVjdGlvbiBvZiBjb21tZXJjaWFsIHIvZSBzcSBmb290IHByaWNpbmcgaW4gc291dGggZmxvcmlkYSB0cmVuZGluZ0jlFlDwBljsFHABeACQAQCYAUSgAbMEqgEBObgBA8gBAPgBAZgCAKACAJgDAIgGAZIHAKAHqgayBwC4BwDCBwDIBwCACAE&sclient=gws-wiz-serp
Interesting trend of turning commercial office buildings into residential apartments/condos, expect that to continue
It may continue but so will the huge debt loads and that’s the real problem.