The average US 30-year fixed mortgage rate rose again this week, reaching its highest level in more than a year and adding further pressure on housing affordability.
According to Freddie Mac, the average 30-year fixed mortgage rate climbed to 6.71%, up from 6.66% the previous week. This is the highest level recorded since July 2025.
US Mortgage Rates Reach Highest Level Since July 2025
Higher borrowing costs are creating another challenge for households already struggling with affordability.
Rising energy prices, renewed tensions in the Middle East and persistent inflation concerns have all contributed to upward pressure on interest rates.
Mortgage rates tend to move closely with US Treasury yields, particularly the benchmark 10-year Treasury yield.
Treasury Yields Add Pressure to Mortgage Costs
US Treasury yields have risen in recent weeks as investors weigh several economic risks.
These include concerns about growing government borrowing, stronger competition for capital from companies investing heavily in artificial intelligence infrastructure, and the possibility that geopolitical tensions could push inflation higher.
Higher Treasury yields often translate into higher mortgage rates, increasing financing costs for homebuyers.
Inflation Remains Above the Fed’s Target
Inflation continues to remain above the Federal Reserve’s 2% target.
The Personal Consumption Expenditures Price Index, which is the Fed’s preferred inflation measure, has stayed above target for roughly five and a half years.
Persistent inflation has made the outlook for interest rates more uncertain, as policymakers continue to balance price stability against signs of slowing economic activity.
Waller Signals Fed May Hold Rates Steady
The US 10-year Treasury yield moved lower on Thursday after Federal Reserve Governor Christopher Waller suggested the central bank may not need to raise interest rates at its upcoming meeting.
Waller pointed to signs of easing inflation in the latest two monthly reports. He also highlighted the strain that elevated borrowing costs are placing on households.
He noted that mortgage rates and auto loan rates remain high, while housing activity has weakened and purchasing a new vehicle has become increasingly difficult for many middle-class households.
US 10-Year Yield Falls After Recent Spike
The benchmark US 10-year Treasury yield fell to around 4.744% on Thursday.
The decline followed a sharp move higher a day earlier, when the yield reached 4.818%, its highest level since November 1, 2023.
Waller said that another favorable inflation reading for August could make him more comfortable with keeping rates unchanged at the Federal Reserve’s September 15-16 meeting.
Housing Affordability Remains Under Pressure
The latest increase in mortgage rates is likely to keep housing affordability in focus.
With the 30-year fixed mortgage rate now at 6.71%, borrowing costs remain elevated for prospective buyers. If Treasury yields stay high, mortgage rates could also remain under pressure.
However, a continued slowdown in inflation could reduce expectations for further Federal Reserve tightening and potentially provide some relief to bond yields and mortgage rates.
