Mortgage rates top 7% for the first time in more than 2 years, MBA data shows, tell me about this news in (https://www.cbsnews.com/news/mortgage-rates-top-7-percent-mba/)

Based on the CBS News report by Mary Cunningham, here are the key details from the article:

• Rates Surpass 7%: According to data released by the Mortgage Bankers Association (MBA), the average contract interest rate for a 30-year fixed-rate mortgage rose to 7.12% for the week ending September 18. This marks the first time rates have topped 7% in more than two years (last reaching that level in May 2024).

• Shift to Adjustable-Rate Mortgages (ARMs): As fixed borrowing costs climbed, more prospective homebuyers turned to riskier adjustable-rate mortgages to secure lower payments. Mike Fratantoni, chief economist at the MBA, noted that rates for 5/1 ARMswhich hold a fixed rate for the first five years before adjustingwere more than a full percentage point lower than standard fixed-rate loans.

• Comparison with Freddie Mac Data: Freddie Mac’s benchmark survey showed rates at 6.95% as of September 17, with new weekly figures scheduled for release shortly after the MBA report.

• Bond Yields & Treasury Spikes: Mortgage rates closely track the 10-year U.S. Treasury yield, which hovered near 5% following upward pressure from inflation concerns, government debt, and geopolitical tensions.

• Federal Reserve Action: The Federal Reserve’s decision to implement a quarter-percentage-point interest rate increase was also priced into lender offerings.

• Affordability Strain: The rate spike coincides with home prices lingering near record highs, significantly compounding monthly borrowing costs for buyers.

• Cooling Demand: While the homebuying season typically slows in late summer and early autumn, economists caution that persistent rate volatility and heightened affordability barriers are threatening to stall mortgage origination and sideline potential buyers.