WASHINGTON, DC — Mortgage rates moved higher again this week, pushing the average long-term U.S. home loan to its highest point in more than a year. Freddie Mac said Thursday that the average rate on a 30-year fixed mortgage rose to 6.71 percent, up from 6.66 percent last week.
The new figure is the highest since July 31, 2025, when the average stood at 6.72 percent. A year ago, the 30-year rate was 6.50 percent, underscoring how borrowing costs have stayed elevated for much of the past year.
The increase matters because even small rate changes can alter monthly payments and stretch household budgets. For buyers trying to enter the market, higher financing costs can reduce how much home they can afford.
Refinancing Borrowers Also Face Higher Costs on 15-Year Loans
The move was not limited to the most common home loan. Freddie Mac said the average rate on a 15-year fixed mortgage rose to 6.04 percent from 5.98 percent the week before. A year earlier, that rate averaged 5.60 percent.
Fifteen-year loans are often used by borrowers refinancing existing mortgages, so the latest increase adds another layer of pressure for households weighing whether to lock in a new rate. Higher borrowing costs can make refinancing less attractive even when homeowners are looking to shorten the life of their loan.
These rate changes arrive at a moment when many buyers are already cautious. With home prices still high in many areas, the cost of financing can become the deciding factor between moving forward and waiting.
Rising Rates Keep a Lid on Homebuyer Demand
Higher mortgage rates can add hundreds of dollars a month to a loan payment, and that extra expense has real effects on buying behavior. As rates rise, buyers lose purchasing power, which can push some would-be shoppers to delay a purchase altogether.
That hesitation is one reason U.S. home sales have remained weak this year. The housing market has been stuck in a slow stretch since mortgage rates began rising from pandemic-era lows in 2022, and the latest increase does little to change that picture.
Sales of previously occupied U.S. homes were essentially flat last year, holding near a 30-year low, and they slowed again in July. For sellers, that means fewer qualified buyers. For buyers, it means a market where monthly affordability remains difficult.
Bond Yields and Inflation Expectations Are Driving the Move
Mortgage rates are shaped by a mix of inflation trends, Federal Reserve policy, and what bond investors expect from the economy. They generally move in the same direction as the 10-year Treasury yield, which lenders use as a guide when pricing home loans.
That benchmark yield was 4.74 percent by midday Thursday, up from 4.67 percent a week earlier. Before the conflict began in late February, it was 3.97 percent. The climb in long-term bond yields has helped pull mortgage rates higher as well.
Worries about the federal government’s growing debt have added to that pressure, and the U.S. Treasury Department intervened last month. Together, those forces have kept long-term borrowing costs from easing in the way many home shoppers had hoped.
U.S. War With Iran Has Added Pressure to Oil Markets and Inflation
One major driver behind this year’s rise in rates has been the U.S. war with Iran, which has stirred expectations for hotter inflation after crude oil prices jumped. Over the past week, renewed fighting between the two countries has put more strain on oil markets and pushed crude prices higher again.
Higher oil prices can feed through to broader inflation, and that tends to lift bond yields. As yields rise, mortgage rates usually follow. That chain of events has made borrowing more expensive for homebuyers and refinancers alike.
The result is a housing market facing pressure from multiple directions. Inflation raises living costs, while higher mortgage rates increase the cost of borrowing. Together, those factors can weaken demand even when people would otherwise be interested in buying.
Federal Reserve Faces Pressure as Inflation Stays Elevated
Inflation remains a central concern for the Federal Reserve, and expectations are building that the central bank will keep acting to slow it. Wall Street expects the Fed to raise interest rates before the end of the year as officials try to bring inflation down from levels still well above 3 percent.
Fed Chair Kevin Warsh said last week in Jackson Hole, Wyoming, that inflation had not improved enough and that the central bank might have “more work to do.” That language suggested he is considering a rate increase at the Fed’s next meeting, set for Sept. 15-16.
The Fed does not set mortgage rates directly, but its short-term decisions influence bond investors and can eventually affect the 10-year Treasury yield. That means the central bank’s next move could matter for future housing costs even if mortgage rates do not respond immediately.
Economists See Little Relief for Buyers This Fall
Realtor.com senior economist Jiayi Xu said consumers should not expect much relief in the near term. Xu said the fall is unlikely to bring meaningful mortgage-rate improvement if inflation remains sticky, and that continued price pressure would squeeze housing from both sides.
That squeeze comes from what households can afford and what they are willing to buy into. If paychecks lose purchasing power while mortgage rates stay elevated, fewer buyers can comfortably make the jump into homeownership.
For now, the latest Freddie Mac data suggest the same basic pattern is still in place: borrowing costs are high, affordability is tight, and the housing market remains far from a full recovery. Until inflation cools more convincingly, that backdrop is likely to keep many buyers on the sidelines.
More on what homes, rents and new builds are doing near you, on RHS Commoner.
