By Shaina Mishkin

Mortgage rates rose nearly a quarter of a percentage point over the past week, driving some buyers to adjustable-rate loans.

Mortgage rates increased to 6.83% over the past week, according to data from Fannie Mae. The gain came as bond prices fell, sending Treasury yields higher, as markets weighed the implications of U.S. tariff policy.

The increase of 0.21 percentage point was the sharpest weekly gain since last April. The rate itself was the highest since February, though as Fannie Mae chief economist Sam Khater noted in a release, it remained below the 7% threshold for the 13th week in a row.

The sharp increase appears to be pushing more buyers to adjustable-rate loans, or ARMs, instead of the 30-year fixed-rate mortgages that are seen as standard in the U.S. Adjustable-rate loans offer a lower initial rate, but recalculate after a period. That is a plus for borrowers if rates come down in the future, or if a borrower sells before the fixed period ends, but can lead to higher costs if they hold on to their home and rates go up.

Of all the mortgage applications tallied by the Mortgage Bankers Association last week, 9.6% were for ARMs. It was the highest share since November 2023, according to the trade group.

The rise in the share of ARM applications is "indicating that borrowers are seeking alternative options for navigating affordability concerns in home purchases," Bob Broeksmit, the Mortgage Bankers Association's president and CEO, said in a Thursday statement.

The new home market is another place where buyers might find lower mortgage rates. As mortgage rates have remained high and uncertainty about tariffs has made consumers less confident, builders have offered buyers incentives to close deals.

Such incentives can include mortgage rate buy-downs, in which a builder pays to lower a buyer's mortgage rate for a period. A little over six in 10 builders offered sales incentives in April, according to the National Association of Home Builders.

As demand pulls back, price cuts on homes aren't out of the question. More sellers with listings on Zillow cut their price than in any March since at least 2018, the company said Thursday.

Write to Shaina Mishkin at shaina.mishkin@dowjones.com

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April 17, 2025 13:16 ET (17:16 GMT)

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