WASHINGTON, DC — Mortgage rates climbed again last week, pushing the benchmark 30-year fixed loan to 7.4% and extending a run of increases to seven weeks in a row. Freddie Mac said Thursday that the latest jump came from 7.28% the previous week, keeping borrowing costs well above the level homeowners and buyers were seeing a year ago.
The latest reading matters because it feeds directly into monthly payments for anyone financing a purchase. Freddie Mac also reported that the average 30-year rate was 6.3% one year earlier, showing how much the cost of borrowing has moved over a relatively short span.
The 15-year mortgage also moved higher as financing costs kept climbing
The upward move was not limited to the most common mortgage product. Freddie Mac said the average rate on a 15-year fixed mortgage rose to 6.73% from 6.6% the week before, adding to the broad pressure facing borrowers across the housing market.
Higher rates can make shorter-term loans less attractive too, even though they usually carry a lower rate than 30-year loans. For many buyers, the immediate issue is not just the headline rate but how much the monthly payment changes once interest is added to principal, taxes, and insurance.
That difference has become more important as home shoppers weigh whether to move forward now or wait for better financing conditions. In markets where prices remain elevated, even a small rate increase can change what a household can afford to borrow.
Economists point to Treasury yields, inflation expectations, and a bond selloff
Realtor.com senior economist Joel Berner said the latest increase reflects continued pressure from the 10-year Treasury yield, which averaged 5.28% this week, 9 basis points higher than the week before. Mortgage rates do not move in lockstep with Federal Reserve decisions, but they tend to track Treasury yields closely.
Berner described the mix behind the increase as a combination of inflation expectations, a broad selloff in the bond market, and rising fiscal deficits that are forcing more debt issuance. Those forces have pushed yields higher, and mortgage rates have followed the same direction.
As of Thursday afternoon, the 10-year Treasury yield was hovering around 5.22%. That level helps explain why mortgage costs have stayed elevated even as many buyers continue to hope for relief.
Affordability worries are cooling demand and slowing some home sales
Berner said the higher borrowing costs have left the housing market uneasy. He said pending home sales fell year over year in both August and September, and that decline happened even before mortgage rates crossed the 7% mark.
According to his comments, the financing side of the market is now a major drag on demand. Buyers who are already stretched by affordability problems are finding it harder to move ahead when rates rise, while sellers are facing weaker traffic and more resistance to asking prices.
The result is a market that can feel slower and more cautious, especially for first-time buyers who rely heavily on financing. For those shoppers, the monthly payment often matters more than the list price alone.
Sellers are cutting prices more often while cash buyers gain leverage
Berner said sellers have been forced to cut prices at a pace not seen in four years. That shift suggests that some owners are adjusting expectations as higher mortgage rates shrink the number of qualified buyers.
At the same time, the market looks different for buyers who do not need a loan. Berner said cash purchasers are seeing favorable conditions, with prices down 1.4% from a year earlier and for-sale inventory up 5.4% year over year.
That split underscores the divide between financed and cash purchases. Households relying on mortgages are feeling the pinch of rising rates, while buyers with cash are able to take advantage of softer pricing and more available listings.
Why the latest increase matters for households planning a purchase
The latest Freddie Mac survey adds another sign that the housing market remains under stress from borrowing costs rather than just home prices. When mortgage rates rise for weeks at a time, buyers may have to lower their budgets, search longer, or accept a smaller home than they first expected.
For many households, the problem is that wages and savings do not adjust as quickly as interest rates do. A loan that looked manageable a few months ago can become much harder to fit into a monthly budget once rates push higher.
That is why the current trend has become so important to both buyers and sellers. As long as rates stay elevated and Treasury yields remain high, financing will likely remain a central obstacle in the housing market.
More on what homes, rents and new builds are doing near you, on RHS Commoner.
