A stronger jobs report and global trade uncertainty pushed mortgage rates higher. More buyers are considering adjustable-rate loans.

NEW YORK — Mortgage rates turned upward this week after falling the previous five weeks in a row. The 30-year fixed-rate mortgage averaged 6.78% APR, up four basis points from the previous week's average, according to rates provided to NerdWallet by Zillow. A basis point is one one-hundredth of a percentage point.

Rates turned around after the release of a stronger-than-expected June jobs report.

Are adjustables the answer to rate troubles?

Homebuying season is winding down, and now mortgage rates are rising. What's a determined home buyer supposed to do? One answer might be: Get an adjustable-rate mortgage.

"People should start looking at the ARMs," says Carolyn Morganbesser, assistant vice president of mortgage originations for Affinity Federal Credit Union in the New York area. She says her firm can offer an ARM with an interest rate well below 6%.

The most popular ARMs have a fixed rate that lasts five or seven years. Then the rate adjusts every six months thereafter. "As long as you're a savvy homeowner and pay attention when fixed rates come down, you can refinance into a fixed rate," Morganbesser says.

The Mortgage Bankers Association says 7.7% of applications last week were for adjustable-rate mortgages. Borrowers aren't exactly clamoring for them, but ARMs usually get more popular when rates rise.

An ARM is riskier than a fixed-rate loan because the interest rate can go up during the adjustment period. And there's no guarantee you'll be able to refinance at a lower fixed rate.

But an ARM could be your best chance at a reasonable interest rate, says Morganbesser, adding that her staff has seen an uptick in ARM applications.

Builders are bummed about business

This week's disappointing rise in mortgage rates might make you grouchy. Others feel gloomy.

Take home builders. Their confidence in the housing market is near an all-time low, according to a monthly survey by the National Association of Home Builders (NAHB).

Builders' unhappiness comes from the fact that they borrow money, just like most of their customers.

Builders get loans to buy land and materials and then pay interest on that money until they find a buyer. When interest rates go up, builders get squeezed on two sides: costs and income.

Builders' monthly costs go up because of higher interest payments. Their income goes down as they often cut prices so buyers can afford homes at higher mortgage rates.

The NAHB says 37% of builders cut prices in June. That's the highest percentage since the NAHB began tracking this monthly stat in 2022. The average price reduction in June was 5%, or more than $20,000 on the median price of a new home.

Foreigners frown on tariff flip-flops

Meanwhile, foreigners are grumpy about U.S. trade policy. That's bad for American mortgage borrowers.

The Bank of England described the problem in its July Financial Stability Report. It noted that the United States flip-flopped on tariffs in April, with an announcement of a sharp increase on April 2, then a pause one week later. Since then, global investors are charging higher interest on the money that the American government borrows.

That's the opposite of how it usually goes. Normally, yields on U.S. government debt fall during times of stress, the U.K.'s central bank pointed out.

Instead, the 10-year Treasury yield rose from 4.17% on April 1 to 4.42% on July 8. Mortgage rates tend to move in the same direction as Treasury yields. So international investors are helping push mortgage rates higher as they digest erratic tariff policy.

© Copyright 2025, The Courier-Times. All rights reserved.