Why Borrowing Costs Are Climbing for Mortgages and Car Loans

The Washington Post, CBS News, CNBC, Bloomberg, the Wall Street Journal contributed to this report.

Treasury yields are pushing higher again, and borrowers are starting to feel the squeeze.

The most recent jump has taken some Treasury yields to levels not seen since 2007, and that tends to spill straight into consumer borrowing costs. Mortgages are getting pricier. Car loans are not far behind. Even refinance deals, which used to offer some relief, have become a tougher sell.

For homebuyers, the timing is frustrating. Mortgage rates dipped below 6% earlier in 2025 and even briefly got back near that level in April. But the relief did not last. Rates have been ticking back up, and borrowers shopping for a loan now are looking at a much less friendly market than they were a few months ago.

As of May 20, the average 30-year mortgage rate was 6.62%, according to Zillow. The 15-year average was 6.12%. Both are higher than earlier this week and well above where they stood earlier in the year. For anyone planning to buy this spring or summer, locking a rate now could be the safer move, since many lenders will let borrowers float down if rates improve before closing.

Refinancing looks even rougher. The average 30-year refi rate was 7.05%, while the 15-year refi rate was 6.08%. Back in early March, those averages were much lower. The difference may look small on a chart, but over the life of a loan, it can mean a lot of money.

The pressure is showing up in the real mortgage market too. The Mortgage Bankers Association said total application volume fell 2.3% last week. Purchase applications dropped 4%, while refinance applications were basically flat. The share of adjustable-rate mortgages climbed to nearly 10%, the highest since October, which tells you some borrowers are getting more flexible just to find a cheaper monthly payment.

That kind of move usually happens when people feel pinned by high fixed rates. ARMs start out cheaper, but they come with more risk later if rates reset higher.

The bigger backdrop is not helping either. Inflation worries are still hanging around, fueled by higher fuel costs and nervousness about government debt. Bond yields have been moving higher in the U.S. and overseas, and that keeps feeding through to lending rates for households.

So the short version is this: mortgages, refinancing and even car loans are getting more expensive because bond yields are climbing and lenders are passing that cost along. The market is still offering options, but bargain hunting matters more than ever. Shopping around could make a real difference.