Mortgage rates climb: Average rate on 30-year home loan hits highest level in months
Mortgage rates rose for the third week in a row, pushing the average long-term U.S. home loan rate to its highest level in over 14 months.
The benchmark 30-year fixed rate mortgage rose to 6.76% from 6.71% last week, mortgage buyer Freddie Mac said Thursday. One year ago, the average rate was 6.35%.
Higher mortgage rates can add hundreds of dollars a month in costs for borrowers, limiting homebuyers’ purchasing power. As rates rise, that can also lead prospective home shoppers to delay buying a home, one reason U.S. home sales remain largely stagnant again this year.
The average rate is now the highest it’s been since June 26, 2025, when it was at 6.77%.
Borrowing costs on 15-year fixed-rate mortgages, often sought by borrowers refinancing a home loan, also rose this week. That average rate increased to 6.09% from 6.04% last week. A year ago, it was at 5.5%.
Mortgage rates are influenced by several factors, including inflation, broader policy rate decisions from the Federal Reserve and expectations from bond market investors for the economy. They generally follow the trajectory of the 10-year Treasury yield, which lenders use as a guide to pricing home loans.
Both mortgage rates and bond yields have been mostly rising this year due to the U.S. war with Iran, which has pushed oil prices sharply higher. That’s led to heightened worries about inflation, which drives up bond yields.
The 10-year Treasury yield has now hit levels not seen since late 2023, after the Federal Reserve cranked its key interest rate higher to get super-high inflation coming out of the COVID-19 pandemic under better control.
The yield was at 4.92% as of midday Thursday on the bond market. Just a week ago, it was at 4.77%. In late February, before the war, it was at 3.97%.
Worries about the U.S. government’s growing debt have also helped drive up long term bond yields, prompting the U.S. Treasury Department to intervene last month.
As inflation remains elevated, pressure is increasing on the Federal Reserve to take action to help lower it.
Typically, the Federal Reserve will raise its main interest rate in order to rein in high inflation. Such a move then filters out through the rest of the bond market.
Fed Chair Kevin Warsh said late last month at the Fed’s annual economic symposium in Jackson Hole, Wyoming, that inflation had not shown sufficient improvement and that the central bank might have “more work to do,” a sign he is weighing a rate increase at the Fed’s next meeting Sept. 15-16.
Wall Street traders are betting on a roughly 70% chance the Fed will raise the federal funds rate at its meeting next week. That’s up from the 61% probability seen the day before, according to data from CME Group.
The central bank doesn’t set mortgage rates, but its decisions to raise or lower its short-term rate are watched closely by bond investors and can ultimately affect the yield on 10-year Treasurys.
The U.S. housing market has been in a slump since 2022, when mortgage rates began to climb from pandemic-era lows. Sales of previously occupied U.S. homes were essentially flat last year, stuck at a 30-year low. U.S. sales of those homes slowed again last month.
