US 30-year mortgage rate hits highest level in more than a year

The cost of borrowing for Americans is climbing again, with the average 30-year fixed mortgage rate rising to its highest level in more than a year, adding another hurdle for households already facing stretched affordability, according to a Reuters report.

The average rate rose to 6.71% this week from 6.66% a week earlier, mortgage finance agency Freddie Mac said on Thursday. It was the highest level since July 2025, underscoring how elevated borrowing costs continue to weigh on the housing market.

Mortgage rates typically move with US Treasury yields, and those yields have risen in recent weeks as investors worry about the government's growing borrowing needs. Competition for capital from companies investing heavily in AI infrastructure has also added pressure, while renewed hostilities in the Middle East have raised concerns that higher energy prices could make inflation harder to contain.


That has left the housing market caught between two forces, the news agency reported. While there are signs that inflation has started to ease, borrowing costs remain high enough to make homes, cars and other major purchases increasingly difficult for many households.

Federal Reserve Governor Christopher J. Waller highlighted that pressure on Thursday, arguing that financial conditions are far from loose despite expectations that the central bank could lower or hold rates.

"Mortgage rates are not low, auto loans are not -- rates are not low," Waller said at a Reuters Next event in Washington. "And if I see housing's in the tank, new cars have gotten almost to be a luxury instead of a normal thing that a middle class family can do, that's not loose financial conditions."

Waller's comments came as markets reassessed the possibility of a Fed rate hike at its September 15-16 meeting. He said the latest inflation readings had encouraged him and that another improvement in the upcoming August data could make him comfortable with leaving interest rates unchanged.

That stance helped push Treasury yields lower on Thursday, offering some relief to borrowers. The benchmark 10-year Treasury yield fell to 4.744%, after jumping to 4.818% on Wednesday, its highest level since November 1, 2023.

But the decline in Treasury yields has yet to translate into lower mortgage costs. The latest increase in the 30-year mortgage rate shows how quickly borrowing costs can remain elevated when bond markets are under pressure.

Inflation remains a key part of the problem. The Federal Reserve's preferred inflation gauge, the personal consumption expenditures price index, has remained above the central bank's 2% target for about five and a half years and intensified earlier this year.

Higher energy prices could make that challenge more difficult if renewed conflict in the Middle East keeps pushing up fuel costs. At the same time, elevated Treasury yields continue to feed into financing costs across the economy.

For homebuyers, that means even a potential pause in Fed rate hikes does not immediately translate into cheaper mortgages. Waller's comments may have eased pressure in bond markets for now, but housing affordability remains constrained by borrowing costs that are still well above levels households have grown accustomed to.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)