The average interest rate for 30-year fixed-rate mortgages in the United States has risen close to 7% this week, putting further pressure on homebuyers and potentially causing a slowdown in the already sluggish real estate market.
Data released by the U.S. mortgage financing institution Freddie Mac on Thursday, September 17, showed that the average interest rate for 30-year fixed-rate mortgages in the U.S. has increased from 6.76% last week to 6.95% this week, up from 6.26% a year ago. This marks the highest level in 19 months for this popular type of mortgage and the largest weekly increase in 16 months.
This is the fourth consecutive week of increase in the average interest rate for 30-year fixed-rate mortgages in the United States. Since the week of January 30, 2025, the average rate has not reached the current level.
The average interest rate for 15-year fixed-rate mortgages also rose this week, climbing from 6.09% last week to 6.26%. A year ago, this type of loan had an average rate of 5.41%, making it a favorable choice for borrowers looking to refinance existing home loans.
The recent sharp increase in mortgage rates may deter some potential homebuyers who are still on the fence. Data released by the Mortgage Bankers Association (MBA) on Wednesday showed that mortgage applications for home purchases last week were down 19% compared to the same period last year, while refinance applications plummeted by 65%.
According to data from the National Association of Realtors (NAR), sales of existing homes in August increased by 0.3% compared to July, but decreased by 4.7% compared to a year ago.
NAR’s Chief Economist Lawrence Yun stated, “The real estate market remains sluggish, with contract signings below last year’s levels. This is due to higher mortgage rates offsetting the purchasing power boost from job and income growth exceeding home price gains.”
The current rise in mortgage rates will add hundreds of dollars to borrowers’ monthly housing costs, limiting buyers’ purchasing power.
On Wednesday, the Federal Reserve raised its benchmark interest rate by 0.25 percentage points, marking the first rate hike since July 2023 and is expected to put upward pressure on mortgage rates.
Although the Federal Reserve does not directly control mortgage rates, its actions in interest rate policies affect the 10-year Treasury bond yield, indirectly impacting the level of mortgage rates. While influenced by multiple factors, mortgage rates generally follow the trend of the 10-year U.S. Treasury yield, which is an important reference for lenders in pricing mortgages.