A borrower financing a $400,000 home loan now pays roughly $255 more a month than in late February. That is the price of a rise of nearly one percentage point in the 30-year mortgage rate, which reached 6.95% in the week Freddie Mac reported on Thursday, September 17, up from 6.76% the week before.
It was the fourth straight weekly increase and the highest level since January 30, 2025. A year earlier the average stood at 6.26%. In late February it had briefly dipped to 5.98%, the lowest since late 2022. The 15-year rate, often used for refinancing, rose to 6.26% from 6.09%, against 5.41% a year ago.
For buyers waiting for relief, the wait looks long. Higher rates can add hundreds of dollars a month to a borrower’s costs and cut purchasing power. Some shoppers simply put off buying.
A market stuck in a rut
The housing market has been stuck this year largely because of borrowing costs, which have climbed steadily since the US-Iran war began in late February. Surging oil prices fed expectations of higher inflation, and that pushed up the long-term bond yields lenders use to price home loans.
Mortgage rates generally track the 10-year Treasury yield. It was 3.97% in late February, before the war. On Monday it broke through 5% for the first time since 2023, and it traded at 4.94% at midday Thursday.
The Fed adds weight
The Federal Reserve raised its key interest rate on Wednesday, its first increase in three years, in an effort to tame inflation. It does not set mortgage rates, but bond investors watch its moves closely, and those moves can ultimately lift the 10-year yield. The Fed also signaled that another hike could come later this year, which could put more upward pressure on mortgage rates.
Sources
- US mortgage rates brush 7%, weighing on buyers, sellers and further straining a bleak housing market
