The average interest rate on a 30-year fixed-rate mortgage in the U.S. rose to 6.95% as of Wednesday, Freddie Mac reported Thursday. This marks the highest level since January 2025 and a 19-basis-point increase from the previous week's 6.76%. The rise in mortgage rates is expected to further strain housing affordability and potentially sideline more prospective buyers.
Higher mortgage rates increase monthly payments for homebuyers, reducing their purchasing power and potentially leading to a slowdown in housing market activity. This trend can impact home sales volume, construction, and related industries.
The average interest rate on the most common U.S. home loan, the 30-year fixed-rate mortgage, climbed to 6.95% as of Wednesday, according to mortgage giant Freddie Mac. This marks a 19-basis-point increase from the previous week's average of 6.76% and is the highest level seen since January 2025.
The 15-year fixed-rate mortgage also saw an increase, averaging 6.26% compared to 6.09% last week. These rising borrowing costs are a significant hurdle for prospective homebuyers, potentially reducing purchasing power and leading some to delay their purchase decisions. Analysts suggest that the recent Federal Reserve rate hike and other economic factors are likely to keep mortgage rates at or above the 7% threshold, creating a substantial barrier to affordability. The U.S. housing market has been experiencing a slump since 2022, exacerbated by climbing mortgage rates and a chronic shortage of homes.