Why Have Mortgage Rates Increased Recently?
Mortgage rates have moved higher over the past several weeks. As of October 1, 2026, the average 30-year fixed mortgage rate reached 7.28%, according to Freddie Mac.
Why are mortgage rates increasing?
The recent increase is primarily related to several factors in the financial markets:
- Higher 10-Year Treasury Yields – Mortgage rates generally move closely with the 10-year Treasury yield. Treasury yields have risen significantly, putting upward pressure on mortgage rates.
- Persistent Inflation – Inflation remains above the Federal Reserve’s 2% target. Higher inflation expectations can push long-term interest rates higher.
- Strong Economic Growth – Recent economic data has shown stronger economic activity, causing investors to expect interest rates may remain higher for longer.
- Higher Government Borrowing – Increased government borrowing means more Treasury debt needs to be absorbed by investors, contributing to higher bond yields.
- Conflict in Iran and Higher Energy Prices – The conflict involving Iran has contributed to higher oil and energy prices. Higher energy costs can increase inflation concerns, which can push Treasury yields and interest rates higher. Recent reporting has specifically linked the rise in oil prices related to the Iran conflict with higher Treasury yields and mortgage rates.
What does this mean for borrowers?
Mortgage rates can change quickly because they are influenced by financial markets every day. A rate quote available several weeks ago may no longer be available today.
The good news is that rates can also move lower if inflation, Treasury yields and market expectations improve.
At R&J Capital Group, we monitor market conditions closely and work with borrowers to identify available financing options based on their individual circumstances.