The average rate on a 30-year fixed mortgage rose to 6.76% this week, the highest level since late June 2025, according to Freddie Mac. The increase, up from 6.71% last week, reflects a broader surge in bond yields that has been driven by persistent inflation, geopolitical tensions, and growing concerns over the federal debt.
Rates have climbed steadily since late February, when the 30-year average stood below 6%. The escalation of the conflict in the Middle East, which began in March, has added to economic uncertainty, pushing investors toward higher-yielding assets and lifting long-term Treasury yields. The 10-year Treasury note, which closely tracks mortgage rates, closed at about 4.96% on Thursday, its highest level since April 2007.
The 30-year mortgage rate has only exceeded 7% once in the past two years, hitting 7.04% in mid-January 2025. The current trajectory suggests that threshold could be tested again if bond yields continue to climb.
Rising rates are already weighing on the housing market. The National Association of Realtors reported Thursday that sales of existing homes fell 2% in August to a seasonally adjusted annual rate of 3.98 million, the lowest level in more than a year. Unsold inventory also increased by 3.2% compared with July, signaling a cooling market.
Lawmakers have attempted to address the housing supply shortage with a bipartisan bill that became law in July, though President Trump allowed it to pass without his signature, protesting the Senate's failure to advance his voter ID legislation. The law aims to boost housing construction, but analysts say the impact on affordability may take years to materialize.
The 15-year mortgage rate also rose this week, averaging 6.09%, up from 6.04% last week. That rate, often used for refinancing, was below 5.5% in early March.
Economists warn that the combination of elevated borrowing costs and limited inventory will continue to pressure homebuyers. With the Federal Reserve signaling a cautious approach to rate cuts, mortgage rates are expected to remain elevated for the near term.
For those considering refinancing, the existing home sales slump highlights the broader market slowdown. Meanwhile, the recent funding bill passed by the House offers little direct relief for housing, as attention remains on fiscal policy and its impact on yields.
