WASHINGTON, DC — Home shoppers hoping for relief from higher borrowing costs are seeing the opposite. The average rate on a 30-year fixed mortgage climbed to 6.95% this week, putting it just under the 7% mark and at the highest level in more than 19 months.
Freddie Mac said Thursday that the benchmark rate rose from 6.76% a week earlier. The increase marks the fourth straight week of gains and pushes the average back to a level last seen on Jan. 30, 2025. A year ago, the same loan averaged 6.26%.
The latest move adds another layer of strain to a housing market that has been stuck in place for much of the year. Higher financing costs are making monthly payments harder to manage and are keeping many prospective buyers on the sidelines.
Why monthly payments are getting heavier for buyers
Rising mortgage rates do not just affect the sticker price of a house. They change what a household can actually afford, which is why even small shifts can matter so much to buyers trying to qualify for a loan.
Freddie Mac said the current increase from late February, when the average 30-year rate briefly fell to 5.98%, works out to about $255 more a month on a $400,000 mortgage. That gap can be enough to change the size of a home search, delay a purchase or force buyers to reconsider the neighborhoods they can target.
The pain is not limited to first-time buyers. Anyone trying to move up to a larger home faces the same pressure, and monthly payment uncertainty can make it harder to commit to a sale. In a market already short on momentum, that can mean fewer transactions overall.
Freddie Mac says the 15 year rate also moved higher
Borrowers looking at shorter-term financing are also facing higher costs. The average rate on a 15-year fixed mortgage rose to 6.26% from 6.09% last week, according to Freddie Mac.
That rate was 5.41% a year ago. Although 15-year loans are often used by homeowners refinancing an existing mortgage, they are also chosen by buyers who want to pay off a home faster and save on interest over time.
Even for those borrowers, the recent increase changes the math. A refinancing plan that made sense a few months ago may no longer work as well when the monthly payment rises and the savings shrink. The jump adds to the sense that the recent climb in borrowing costs is affecting more than one corner of the housing market.
The market was already weak before this week's jump
The latest increase comes after an earlier dip in mortgage costs failed to last. In late February, the average 30-year rate briefly fell to 5.98%, its lowest level since late 2022, but it has since moved steadily upward.
That reversal has left the housing market in a rut. Buyers who hoped to return once rates eased have instead watched borrowing costs climb again, and sellers are dealing with a smaller pool of people able to afford current prices. In practical terms, the market has become harder to move from both sides.
As rates rise, some buyers choose to wait in hopes that conditions improve. That hesitation can slow sales even further, especially when households are already stretched by prices and other living costs. The result is a market that remains sluggish rather than delivering the kind of recovery many had hoped for.
Bond yields and inflation expectations are pushing rates upward
Mortgage rates are influenced by inflation, Federal Reserve policy and investors’ expectations for the economy, but they generally track the 10-year Treasury yield. When that yield rises, home-loan rates often follow.
The 10-year Treasury yield was 3.97% in late February before the war between the U.S. and Iran began. It broke above 5% on Monday for the first time since 2023, before trading at 4.94% Thursday afternoon. Lenders use those bond-market signals as a guide when pricing mortgages.
Higher oil prices and expectations for stronger inflation have helped push long-term yields upward. For households, those moves show up in mortgage quotes long before they appear anywhere else in the housing market.
The Fed's latest rate hike could keep pressure on home loans
The Federal Reserve added another reason for mortgage rates to stay elevated when it raised its key interest rate Wednesday for the first time in three years. The move was aimed at fighting surging inflation.
While the Fed does not directly set mortgage rates, its decisions can shape bond-market behavior and influence the 10-year Treasury yield. That means a short-term rate increase can ripple outward and make home borrowing more expensive.
The central bank also signaled that another hike could come later this year. For home shoppers, that keeps the outlook uncertain at a time when many were already waiting for rates to ease. Instead, the path appears to be pointing in the other direction for now, which could keep both buyers and sellers under pressure.
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