Mortgage rates continue to climb, this week reaching their highest point since January 2025, and leaving buyers with an uphill battle at a time when the summer lull typically retreats. And, with a swath of housing indicators–existing home sales, pending home sales, home purchase applications–hitting recent lows or reaching negative territory along with no sign of geopolitical tensions easing, economists warn the housing market cooldown may be in play for some time to come.
Freddie Mac’s latest Primary Mortgage Market Survey® released Thursday tracked the average 30-year fixed rate mortgage (FRM) at 6.95%, up 19 basis points from last week’s 14-month high of 6.76%. The 30-year FRM also is up year-over-year from 6.26% this time last year. The 15-year FRM averaged 6.26%, up from 6.09% last week and up from last year when it averaged 5.41%.
At presstime, the average rate remained over the 7% mark, sitting at 7.19% Thursday afternoon, according to Mortgage News Daily.
Realtor.com Senior Economist Jake Krimmel released a lengthy statement explaining the FRM trajectory since the war in Iran began, as well as in context with the Federal Reserve’s move to raise interest rates and the broader housing indicators as they relate to the overall economy as well as homebuyers and sellers.
“The primary driver (of the FRM increases) is rising 10-year Treasury yields, which climbed through the week and reached their highest levels since 2007 (5.04%) during intraday trading on Tuesday,” Krimmel stated. “Underneath the surface, though, the drivers run well beyond yesterday’s Fed meeting. Whatever the cause, the cumulative move is what buyers will feel. Mortgage rates are now up 30 basis points in the past four weeks, nearly 40 basis points over two months, and close to 100 basis points since the Iran war began in late February. Year-over-year comparisons are not pretty either: after sitting below 2025 levels through July, mortgage rates are running nearly 70 basis points above last year, a gap that has widened quickly because rates were falling last September and are climbing this one.”
Following the Fed’s move to raise interest rates by a quarter point Wednesday, Krimmel noted that the Freddie Mac reading is an average of mortgage rates over the past week, so yesterday’s decision did not necessarily show up in today’s readout, but cautioned:
“That said, it is not clear whether the Fed hike was already baked into the 10-year, which means it may have shown up in this week’s movement anyway,” he said. “What is clearer is that this week’s jump came before the Fed communicated its outlook for the rest of the year. Where mortgage rates go in the coming weeks is less certain. The Fed has signaled it is likely to hike at least once more before year’s end, but we judge the Fed has comparatively less influence over the 10-year (Treasury yield), and therefore over mortgage rates, than it does in normal times.”
That’s due to a host of macroeconomic drivers, he explained.
“Between the war and the supply shocks it has caused, from gas and diesel prices on up, concern over the national debt, and a surge in corporate bond issuance to finance AI, which competes with Treasuries for the same investor dollars, long run rates are being pushed up by many forces at once,” Krimmel stated. “The Fed sets the short term rates, and while there is typically some delayed passthrough to the long end, geopolitics rather than the Fed’s outlook over the next few months may prove decisive for where mortgage rates land.”
For homebuyers and sellers, he added, the highest mortgage rates in more than a year and a half are landing on a housing market that was already decelerating.
Existing home sales hit their 2026 low in August, pending sales have turned negative year over year, and purchase applications are down 19% from a year ago, though that comparison overstates the slowdown in demand given how rates were trending last fall, Krimmel added.
“For buyers, the pace of the increase means they are facing an uphill climb exactly at the time of year when leverage really shifts more in their favor. For sellers, the question now is whether they respond by slashing prices or delisting their home altogether. With rates now five basis points from 7%, the stall in fall is coming early this year,” he said.
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