US 30-Year Mortgage Rate Hits 6.95% as AI Spending and Deficits Lift Yields

3 articles · Updated · Fortune · Sep 19

6.95% — the average 30-year mortgage rate last week — marked its highest level in more than 18 months, underscoring that borrowing costs remain elevated even after Trump renewed attacks on the Fed.
Economists say longer-term rates are being driven less by the Fed than by steady growth, stubborn inflation, heavy AI data-center borrowing and large federal deficits that keep demand for capital high.
5% — the 10-year Treasury yield topped that level this year before Wednesday’s Fed hike — and those higher long-bond yields feed directly into mortgage pricing.
3% annualized growth is now Bank of America’s forecast for the July-September quarter after stronger retail sales, reinforcing the view that consumer demand is still firm despite weak sentiment.
Five straight months of wage growth trailing inflation have kept affordability under pressure, suggesting the post-2008 era of 3% mortgages and ultra-low rates is unlikely to return soon.