More economic volatility likely as mortgage rates near 7.5%
Investors will have a lot to think about next week as key economic data releases start filtering in and Q3 of 2026 comes to an end.
A tumultuous week for mortgage rates is coming to an end — but with key economic data slated for release in the coming days, next week could also prove volatile.
Rates a breath away from 7.5%: The 30-year mortgage rate ticked up again on Friday, according to Mortgage News Daily (MND). The surge in mortgage rates is related to 10-year Treasury bonds, which experienced a selloff in recent weeks prompted by lingering concerns over inflation and government debt.
With those 10-year bonds reaching levels last seen around 20 years ago, MND estimated the 30-year rate to be 7.49% the morning of Sept. 25, up about half a percentage point in the past two weeks. "While that's certainly not the fastest jump we've seen, it is an extraordinarily uncommon pace," MND COO Matthew Graham noted in an online post assessing the latest data.
Affordability crunch persists: The rise in mortgage rates has done a number on affordability heading into a time of year that typically brings leverage for homebuyers. The Federal Reserve Bank of Atlanta's latest monthly measure of homeownership affordability was at 68 for July, or around the lowest level of the past three years — and in July, 30-year rates were still in the 6.6% range.
The Atlanta Fed's Home Ownership Affordability Monitor (HOAM) estimates that while the nation's median household income is just shy of $86,500, a median household income of nearly $126,500 is needed to buy a median-priced home. The HOAM hasn't hit its breakeven point since May 2021.
New data coming soon: Next week, investors are expected to pay close attention to a variety of incoming economic reports on personal income and spending, wages and the federal government's monthly jobs report. The bonds selloff could slow if these reports contain signs of a cooling economy, which would in turn ease pressure on mortgage rates.
The third quarter of 2026 also comes to an end next week, bringing about a busy time for investors as they evaluate risk and reposition their portfolios. Several Federal Reserve governors are expected to attend events and deliver speeches in the days ahead, which could provide investors with more information about how Fed officials are thinking about short-term interest rates following the central bank's mid-September rate hike.
Scheduled events and data releases aside, the ongoing war in Iran remains a wildcard as elevated energy prices continue adding strain to the U.S. and global economies.