The Freddie Mac 30-year fixed mortgage rate climbed above 7 percent in today’s release, marking the highest level since January 2025, when President Donald Trump returned to the White House with the promise to lower borrowing costs. Rates entered the week just 5 basis points below that line, according to Realtor.com Senior Economist Anthony Smith, after jumping 19 basis points to 6.95 percent in last Thursday’s release from the mortgage giant. It was the largest one-week increase since April 2025, and a sign that investors were feeling antsy about inflation and the Federal Reserve’s meeting last Wednesday.
On that day, the central bank raised its key interest rate for the first time in three years, as Chairman Kevin Warsh said the Fed had to take responsibility for lower inflation after years of it being much higher than it should have been. The central bank aims for a 2 percent annual inflation rate; in August, inflation in the U.S. was at 3.4 percent. While the central bank has no direct authority over mortgage rates, its decision influences financial markets, particularly the yield on the 10-year U.S.
Treasury note, which mortgage rates tend to follow. And as many came to expect an interest rate hike at the Fed’s September meeting, the 10-year Treasury yield started moving up, pushing up mortgage rates as well. On Wednesday, the 10-year Treasury surged 15 basis points to 5.11 percent, a 19-year high.
With yields heading upward, “mortgage rate pressure seems likely to linger,” Smith said. For buyers and sellers across the U.S., “the highest mortgage rates in more than a year and a half are landing on a market that is in the midst of a slowdown,” Smith said. Mortgage rates, which were widely expected to drop to 6 percent throughout this year, started climbing again in late February after reaching a promising 5.98 percent after the start of the war in Iran.
Higher-than-expected rates have taken away the chance for that boost in demand and home sales the experts were counting on this year. Instead, the housing market has remained sluggish this year, even during the normally busy spring season, and is now emerging from a slow summer marked by falling sales and still-climbing prices. Would-be buyers and sellers have somehow adjusted to a high-mortgage rates environment since 2022, which has forced many homeowners to stay “locked” into their homes and kept many renters to the sidelines.
But while higher rates might not make a meaningful change for those who were already on the fence about buying or selling a home, a 7 percent rate “is as much psychological as mathematical, and it arrives at the point in the season when leverage usually shifts toward buyers,” according to Smith. A majority of experts think that mortgage rates are likely to continue climbing in the coming weeks, especially as the Fed seems poised for another rate hike later this year. A lot will depend on what happens with oil and gas prices, loanDepot Chief Investment Officer and Head Economist Jeff DerGurahian told Newsweek.
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