Prospective homebuyers are facing higher borrowing costs this week as the average 30-year fixed mortgage rate crept closer to 6.5%.
Mortgage buyer Freddie Mac reported Thursday that the benchmark 30-year rate rose to 6.49%, up from 6.43% the previous week. At this same point last year, that rate stood at 6.72%.
When mortgage rates climb, borrowers can end up paying hundreds of dollars more each month, which cuts into what they can afford to spend on a home.
Rates have stayed elevated after briefly dipping below 6% in February — the first time that had happened since late 2022. They then climbed again in May, reaching their highest point in nine months. That upward pressure has taken a toll on home sales throughout the year.
The cost of refinancing also ticked upward. The average rate on a 15-year fixed mortgage — a popular option for homeowners looking to refinance — rose to 5.82% from 5.79% last week. A year ago, that rate was 5.86%, Freddie Mac said.
Several forces shape where mortgage rates land, including the Federal Reserve’s interest rate decisions and how bond market investors read the economic and inflation outlook. Rates typically move in step with the 10-year Treasury yield, which lenders rely on when setting home loan prices.
Concerns about inflation heating up — driven in part by higher crude oil prices since the war with Iran began in late February — have pushed long-term bond yields upward, pulling mortgage rates along with them.
By midday Thursday, the 10-year Treasury yield sat at 4.55%, compared to 4.49% a week earlier. Back in late February, just before the war started, it was only 3.97%.
The current 30-year mortgage rate has essentially returned to where it was two weeks ago.
Even though average long-term rates are still lower than they were a year ago, the uncertainty created by the conflict with Iran has left many potential buyers hesitant to make a move.
Sales of previously owned homes across the U.S. fell during the first quarter of this year compared to the same period a year ago, continuing a housing slowdown that stretches back to 2022 when rates began rising from their pandemic-era lows.
Through the first six months of this year, seasonally adjusted existing home sales are up just 0.7% compared to the same stretch in 2025, according to the National Association of Realtors.
Overall, existing home sales continue to hover near a pace of 4 million annually — well short of the historical average closer to 5.2 million.
