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Mortgage Rates Hit 1-Year High: Buyers Face Affordability Squeeze
5 Sep
Summary
- Average 30-year fixed mortgage rate reached 6.71%, highest since July 2025.
- Geopolitical tensions and oil prices are fueling inflation and mortgage rates.
- Despite rising rates, buyer demand remains stable, adapting to market shifts.
The average rate for a 30-year fixed mortgage climbed to 6.71% as of Thursday, marking its highest level in over a year, according to Freddie Mac. This figure is just shy of the 6.72% recorded on July 31, 2025. The current rate represents a notable increase from the 6.5% seen a year ago.
This rise in mortgage rates presents a significant hurdle for first-time homebuyers already grappling with affordability issues. Factors such as the Federal Reserve's policies and geopolitical events influence mortgage rates, which closely track the 10-year Treasury yield. The ongoing conflict in the Middle East has exacerbated concerns, driving up oil prices, fueling inflation, and pushing it further from the Federal Reserve's 2% target.
Despite the challenging rate environment, purchase demand has shown resilience. Buyers are adapting to evolving market conditions, indicating steady interest. The average rate on a 15-year fixed mortgage also saw an increase, moving to 6.04% from the previous week's 5.98%.
