Mortgage Rates Just Hit a 15-Month High. Is It Worth Paying Thousands To Lower Yours?

In 2021, when mortgage rates were near historic lows, just 34% of the 30-year primary home-purchase loans carried points, according to a new analysis from Realtor.com®. By 2023, as rates surged, that share had jumped to 60%.“The data provides strong evidence that rate level is the primary driver of the points-buying decision,” Jiayi Xu, senior economist at Realtor.com, explains.The finding matters again now.On Thursday, the average rate on a 30-year fixed mortgage rose for the third consecutive week, hitting 6.76%—its highest level in more than 15 months.And several forces could keep borrowing costs higher for longer: Wholesale inflation accelerated to 5.4% in August, oil prices surged above $100 a barrel as the conflict with Iran escalated, and the 10-year Treasury yield—closely watched by the mortgage market—climbed toward 5%.For homebuyers still waiting for meaningful relief, that puts a potentially expensive option back in focus: paying thousands of dollars upfront to buy down their interest rate—but is it worth it?Why higher rates make points more tempting“Mortgage points let borrowers prepay interest upfront in exchange for a permanently lower rate and smaller monthly payment...