Higher Mortgage Rates Push Americans Toward Riskier Loans 30-year mortgage rates climbed to 6.79%, the highest level since June 2025, as inflation and deficit concerns push bond yields higher. Higher rates are keeping overall mortgage demand largely stagnant, with applications up just 0.8% last week. Surging US mortgage rates are making home buying increasingly unaffordable for Americans. Home purchase applications rose 2% but remain 0.2% below last year, while refinancing fell 19% YoY as homeowners have little incentive to refinance. With mortgage rates now 15 basis points higher than a year ago, more borrowers are choosing adjustable rate mortgages to get lower rates upfront. ARM applications reached 8% of total mortgage activity, a 5-week high. The 5/1 ARM rate fell to 5.94%, but borrowers are effectively trading a cheaper rate today for the risk of higher payments when the loan resets in the future. Americans are increasingly sacrificing long term certainty for lower payments today, as high mortgage rates squeeze affordability.