US Mortgage Rates Hit Nearly 3-Year High Amid Economic Uncertainty

The average interest rate for a long-term U.S. home loan has risen for the seventh straight week, reaching its highest level in nearly three years, according to data from mortgage buyer Freddie Mac.

The benchmark 30-year fixed-rate mortgage increased to 7.40% from 7.28% the previous week. This marks the highest rate since November 16, 2023, when it stood at 7.44%. A year ago, the average rate was 6.30%.

The surge in borrowing costs has contributed to a slowdown in the housing market this year. Higher mortgage rates increase monthly payments for homebuyers, reducing their purchasing power and leading many to postpone home purchases. The average rate for 15-year fixed-rate mortgages, often used for refinancing, also climbed to 6.73% from 6.60% last week, compared to 5.53% a year ago.

These rising mortgage rates are influenced by several economic factors, including inflation, Federal Reserve policy, and bond market expectations. They tend to follow the yield on the 10-year Treasury note, a key benchmark for lenders. The 10-year Treasury yield has seen significant increases, reaching its highest point since 2002, fueled by concerns over high inflation, substantial government debt, and other economic pressures. The yield was at 5.29% on Thursday, considerably higher than its 3.97% level before early 2024.

In late February, the average rate for a 30-year mortgage had briefly fallen to 5.98%, its lowest point since late 2022. The current increase of approximately 1.42 percentage points since then could add around $376 per month to the cost of a $400,000 home loan based on the current average rate.

The U.S. housing market has experienced a slump since 2022, when mortgage rates began their ascent from pandemic-era lows. Sales of previously occupied homes were largely stagnant last year, remaining at a 30-year low. In August, existing home sales decreased by 2% from July to a seasonally adjusted annual rate of 3.98 million units, marking the slowest pace in over a year, according to the National Association of Realtors.

The increased cost of borrowing has led many potential homebuyers to pause their search. Mortgage applications, which cover both home purchases and refinances, have declined for five consecutive weeks, reflecting the ongoing rise in mortgage rates, according to the Mortgage Bankers Association. Refinance applications have fallen to their lowest point since January 2025 and are less than half of last year's pace.