Mortgage Rates Hit 15-Month High, Shifting Buyer Strategy
Mortgage rates have reached a 15-month high, prompting borrowers to reconsider upfront costs. The 10-year Treasury yield is climbing toward 5%.
Mortgage rates have reached a 15-month high. The 10-year Treasury yield is climbing toward 5%.
Wholesale inflation accelerated to 5.4% in August. Oil prices surged above $100 a barrel. These factors keep borrowing costs elevated.
Buyers face higher upfront costs
Borrowers pay discount points to lower interest rates. One point costs 1% of the loan amount. It reduces the rate by 0.25%.
The median cost of points rose to $3,040 in 2023. It declined to $2,607 by 2025. This remains more than twice the 2021 level.
Rate expectations drive point usage
Sixty percent of eligible loans carried points in 2023. This share fell to 52% in 2025. Buyers often expect future rate cuts.
Many planned to refinance rather than pay upfront. Confidence in imminent rate cuts is declining. This increases the incentive to buy down rates now.
Deeper buydowns persist in market
Forty-three percent of point-carrying loans had at least one full point in 2025. Seventeen percent had two or more points. This is four times the 2021 share.
Sellers in some markets offer concessions for closing costs. Borrowers may still pay for the buydown directly. The financial stakes remain substantial for individuals.
