Mortgage rates hold at 7.17%, and the usual escape hatches save less than they did a year ago

The average 30-year fixed mortgage rate was 7.17% on Tuesday, down 0.02 points on the day, according to the Mortgage News Daily index. That keeps it just below last week's 52-week high of 7.24% and 0.82 points above where it was a year ago. Freddie Mac's weekly survey, which runs behind the daily index, stood at 6.95% in the week of September 17, up from 6.76% the week before. We covered that jump in last week's report.

The driver is the bond market. The 10-year Treasury yield closed at 4.96% on Tuesday, according to the Treasury's daily curve, unchanged from Monday. The 30-year mortgage is running about 2.2 points above that. Follow it on our 10-year chart.

What 7.17% costs

Principal and interest on a $400,000, 30-year loan:

That is $311 a month, or about $3,700 a year, more than a buyer who locked at the low. Taxes and insurance come on top.

The thing that changed: the alternatives got closer

When 30-year rates jump, buyers usually look at two workarounds: an adjustable-rate loan or a 15-year fixed. Mortgage News Daily's numbers show both offer less relief than they did a year ago.

• 7/6 SOFR ARM: 6.72%. That is 0.45 points below the 30-year fixed. A year ago the gap was about 0.56 points (the ARM is up 0.93 points in a year, the fixed 0.82). On $400,000 the ARM saves about $121 a month for the first seven years. After that the rate resets off SOFR, a short-term rate that follows the Fed, and the Fed is raising rates, not cutting.
• 15-year fixed: 6.83%. Only 0.34 points below the 30-year, down from about 0.46 a year ago. On $400,000 the payment is $3,557, about $850 a month more than the 30-year, for a rate cut of just a third of a point.
• FHA and VA: 6.80% and 6.82%. These are the lowest fixed rates in the index, for borrowers who qualify.
• Jumbo: 7.35%. Loans above conforming limits cost the most.

For most buyers the workarounds now mean taking on reset risk or a much bigger payment for a small rate discount. The numbers make a stronger case for negotiating on price and closing costs.

Buyers have the leverage on price

This is where the market is giving. Fortune, citing Redfin, reported that sellers offered concessions in nearly 45% of U.S. home sales in the three months through August, the highest share for that period since at least 2020. It also reported, citing the National Association of Realtors, that existing-home sales fell 2% in August to a pace below 4 million a year, and that the median sale price was $429,100, up 1.6% from a year earlier. Mortgage applications to buy a home were down 19% from a year earlier in the week ending September 11, according to the Mortgage Bankers Association. Our own look at prices is in Redfin's August report.

For someone closing in October or November, a seller credit toward a rate buydown is one of the few levers that moves the payment, since the rate market is not helping. Next data: the MBA application survey on Wednesday and Freddie Mac's survey on Thursday.

Sources: Mortgage News Daily; Freddie Mac PMMS; U.S. Treasury; Fortune. Payments are principal and interest only, calculated by The Company Chronicle. Year-ago gaps are derived from Mortgage News Daily's one-year changes. This is market information, not financial advice.