On a $500,000 loan, the difference between last September and this one comes to $242 a month. A buyer at this week’s average pays $3,337 in principal and interest before taxes and insurance. A year ago the same loan cost $3,095.
The reason is Freddie Mac’s weekly survey, which put the 30-year fixed rate at 7.03% on Sept. 24. It is the first time the figure has been above 7% since January 2025. Newsday noted that the reading was only a slight uptick from 6.95% the week before, but well above the 6.3% average of a year earlier. It was the fifth straight weekly increase, according to Briefs Finance.
Why the rate keeps climbing
Both outlets point to the same cause, the war with Iran. Since it began in late February, mortgage costs have climbed 1.05 percentage points, Briefs Finance reported. Lenders price 30-year loans off the 10-year Treasury yield, and that yield has been rising on worries that a long war will push up inflation and keep the Federal Reserve’s benchmark rate high. Newsday said the 10-year moved above 5.1% this week for the first time since July 2007. Briefs Finance reported that the yield went past 5% after the Fed raised rates at its September meeting.
The pain is visible at the pump too. US retail diesel reached $6.50 a gallon on Sept. 20, a first, and gasoline has stayed above $4 nationwide since mid-July, Briefs Finance said. Another gauge, from Mortgage News Daily, had the 30-year average at 7.45% on Thursday afternoon.
Buyers feel it
Crossing 7% matters beyond the arithmetic. “The general public does look at those fat round numbers and take them to heart,” said Greg Parmiter of Reliant Home Funding in Melville, New York, who called the level “a significant milestone for borrowers.” His firm has not yet lost clients over rates, he said, but the industry is seeing fewer applications. The Mortgage Bankers Association reported that its purchase index fell 11% in the week ending Sept. 18 compared with a year earlier.
Redfin put the weakness in pending sales at 3.5% for the week ended Sept. 13, the lowest in almost three years. Home prices nationally were up 3.7% in August from a year before, the fastest rise in 12 months. Lawrence Yun, chief economist of the National Association of Realtors, said the higher mortgage rate has “essentially neutered” the benefit of faster income gains.
On Long Island, Newsday reported, record prices ($911,000 median in Nassau County, $760,000 in Suffolk) are holding up because so few homes are for sale. Parmiter does not expect rates to dent prices much. He also would not call a peak: “There’s certainly room to go higher.”
What buyers are told to do
Jeff Ostrowski, a housing analyst at Bankrate, advises getting quotes from several lenders, since lender-to-lender gaps widen when rates move fast. A Realtor.com analysis of rate changes since 2000 suggests that someone buying within three months should plan as if rates could rise half a percentage point during the search. That would keep them qualified in 80% of scenarios.
Sources
- Mortgage Rates Rise Above 7% – Housing Strain
- Mortgage rates today top 7% for first time since January 2025 – Newsday
