30-Year Mortgage Rate Hits 7.28%, Highest Since 2023

The average rate on a 30-year fixed-rate mortgage rose to 7.28 percent, its highest level since 2023, up sharply from 6.34 percent recorded one year ago, according to new data reported by The New York Times. The roughly one-percentage-point jump in 12 months represents a significant increase in borrowing costs for prospective homebuyers already navigating an affordability-strained market.

The surge in fixed rates is pushing a growing share of buyers to consider adjustable-rate mortgages, or ARMs, which typically offer lower initial interest rates before resetting periodically based on broader market benchmarks. The shift marks a notable behavioral change among borrowers who had largely favored the predictability of fixed-rate products in recent years.

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Higher mortgage rates directly translate into larger monthly payments, which can price out first-time and move-up buyers alike, potentially further suppressing already-limited housing inventory as existing homeowners with low locked-in rates resist selling. The combination of elevated rates and constrained supply has kept affordability near historic lows across much of the country.

While ARMs can offer near-term relief on monthly payments, they carry the risk of rate increases after the initial fixed period expires — a consideration that proved costly for many borrowers during previous rate-cycle shifts. Financial advisers generally caution that ARM products are best suited for buyers who plan to sell or refinance before the adjustment period begins.

Continue reading at NYT > Business.