An op-ed cheering a 7.28% mortgage reads a little like a dentist cheering cavities, so it got our attention. Allysia Finley’s Life Science column in Monday’s Journal argues that last week’s 7.28% average 30-year rate — the highest in three years, more than double the 2020–21 average — isn’t a crisis but a homecoming. We’ll leave her politics on the page where they ran. The history and the buyer’s math, though, are worth carrying home, especially since the Journal’s own consumer-rates box had moved the goalposts again by Wednesday.
Here’s the history. Anyone who came of age after 2008 remembers mortgages between 2.5% and 5%; Finley’s point is that that was the oddity. From 1971 through 2019 the 30-year averaged 8%, and for most of the 1990s it ran between 7% and 9% — years when the economy grew 3.4% annually on average. The mechanics are simple enough: the 30-year rate tracks the 10-year Treasury, which closed Tuesday at 5.270%, so when growth and inflation run hot, mortgages follow. On top of that, the Fed bought trillions in mortgage-backed securities after 2008 and again in the pandemic, suppressing rates, and has since let that pile run off. Banks, which loaded up on the same paper when deposits ballooned and then watched it help sink Silicon Valley Bank in March 2023, now demand a premium to hold it — and they’ve got better uses for deposits anyway, since business lending has surged past their mortgage-bond holdings.
What a buyer does with 7.28%
Higher rates thin the field. Non-primary residences — second homes and rentals — made up 15% of August sales per the National Association of Realtors, against 21% a year earlier, and just 4% of new Fannie Mae-backed mortgages in the second quarter went to investment or second homes, versus about 8% from 2019 to 2023. Foreclosures on FHA-backed loans rose 47% over the past year as relief programs that had waived payments were curbed — Finley calls that a return to pre-pandemic levels, not a panic — and the extra supply is giving buyers room. The Realtors’ own phrase: homebuyers have “better opportunities to negotiate.” Wages, meanwhile, are growing about twice as fast as home prices. Her worry runs the other way: that regulators loosen already-loose underwriting. The average FHA buyer today carries a 691 credit score and a 45% debt-to-income ratio and puts just 2% down, per the American Enterprise Institute.
And the goalposts: Bankrate’s 30-year fixed in Wednesday’s Journal is 7.47%, up from 7.23% a week earlier and at its 52-week high; the 15-year is 6.87% and the five-year ARM 6.70%. Freddie Mac’s survey, the number Finley used, had the 30-year at 7.28% as of Thursday. Normal, it turns out, keeps moving.
Our read
This is Housing · M6. Whether 7.47% is a tragedy or a homecoming is a debate for the opinion page; for a buyer it’s simply the price of money, and the price of money changes what you do. Three things. Negotiate — supply is up, investors have stepped back, and the seller across the table knows it. Save a bigger down payment — if wages really are outrunning prices, the ground isn’t shifting under you while you save, and every extra point of equity is a point you aren’t paying 7.47% on. And don’t be the 2%-down, 45%-DTI borrower the lender is willing to make you; borrow what the plan carries without flinching, not what the approval letter allows.
If you already own at 3%, none of this is a reason to move. If you’re buying, price the payment at today’s rate and ask whether the budget survives it with room to spare. We’d rather run that number with you at the kitchen table in October than at the closing table in March.