PITTSFIELD — Last week’s increase in mortgage rates will make it more expensive for borrowers to finance a home purchase. But whether that slows the market depends on how many would-be buyers see the increase as cause for caution or incentive to act, area lenders said.
On Thursday, the average interest rate for a 30-year mortgage rose to 7.03 percent, up more than a percentage point since February. Prospective homebuyers will feel it the most, but that percentage point difference matters and can price out some people looking to buy homes at a time the prices of food, fuel and healthcare are also increasing.
“There’s definitely going to be a slowdown [in borrowing],” said Tara McCluskey, a senior vice president and lending officer at Greylock Federal Credit Union. “The slowdown is going to come probably faster and a little sooner than we would anticipate because of these interest rates.”
So, why do rates change and what causes them to change?
Rates for the 30-year mortgage are closely tied to the 10-year treasury yield, which has been rising to levels not seen in a decade, said Jamie Pollard, an area manager and loan officer with Guild Mortgage of Dalton. That 10-year mark “went above 5.1 [percent] for the first time in 19 years.”
Part of the reason for the rise is “the global uncertainty that’s going on,” McCluskey said. “The stock market will react to that and drive up that treasury bond.”
The bond market is also reacting to higher-than-expected inflation, said Chuck Leach, president of Lee Bank.
Leach also said that economic growth has been more robust than what people expected, which, despite being an overall positive, also raises the 10-year treasury rate.
This confluence of factors pushed the 30-year fixed-rate mortgage average interest rates above 7 percent, Leach said, which is a figure banks tend to follow, as that’s how they can repackage and sell mortgages.
Still, the increase in mortgage rates will mostly affect prospective homebuyers, McCluskey said, but it will affect them in a big way.
Home Price
$100,000
$100,000 $2,500,000
This tool compares buying a home at two different interest rates. Change either one and move the slider to see how the more a home costs, the more pronounced difference interest rates make.
So far in 2026, the median home price in the county was $374,000. Take a hypothetical homebuyer who has no other debt and can afford the 10 percent down-payment — which would mean having $37,400 in cash on hand — and is setting aside money for taxes and mortgage insurance.
In February, when interest rates were around 6 percent, that buyer would have needed to make $113,204 a year to afford the median value home. A homebuyer today, borrowing at 7 percent, under the exact same circumstances would need to make $122,689.
When mortgage rates increase, the buying power of people looking to purchase homes decreases. And that effect is exacerbated by the price of homes, with the increased rate having a bigger effect on pricier homes.
That will have an overall dampening effect on the housing market, McCulskey said. “It’s that mental block of, ‘Oh my gosh, these rates are seem so high compared to what they were a few years ago.'”
For homeowners with lower interest rates, they are less likely to sell their home and give up that rate too, she said.
Leach said the opposite is true for Lee Bank, as the institution actually has seen more activity.
“They’re motivated to act because it’s been such a pronounced move that they want to at least get in at seven, thinking maybe [rates] go to eight,” he added.
Do you want to construct an ADU in Great Barrington? This program will help fund it
Overall, the mortgage rate increase isn’t a sign of doom for the economy or prospective homebuyers, but it is another affordability pain point. Still, experts said the rates shouldn’t dissuade people from preparing to buy a home.
“This kind of rate shouldn’t scare somebody completely,” McCulskey said. “It might require more preparation, a little more budgeting … It shouldn’t be a complete deterrent. It’s still attainable. It might not be right this moment, but in a couple months, things could be different.”
