US Mortgage Rates Climb to 6.66%, Highest in a Year

The average 30-year fixed mortgage rate just hit a one-year high, and the housing market is feeling it. The average long-term U.S. mortgage rate rose for the fourth consecutive week to its highest level in a year, with the benchmark 30-year fixed rate climbing to 6.66% from 6.58% last week, according to Freddie Mac.

What Freddie Mac reported

The average for a 30-year, fixed loan increased to 6.66% from 6.58% a week earlier, with the rate marking the highest since July 31, 2025, when it was 6.72%.

Borrowing costs on 15-year fixed-rate mortgages, often sought by borrowers refinancing a home loan, also rose this week, with that average rate increasing to 6.04% from 5.96% last week. A year ago, it was at 5.85%.

What is pushing rates higher

Mortgage rates are influenced by several factors, from the Federal Reserve's interest rate policy decisions to bond market investors' expectations for the economy and inflation, and they generally follow the trajectory of the 10-year Treasury yield.

Rates have been mostly rising this year as the conflict in Iran has driven crude oil prices sharply higher, fueling expectations of hotter inflation and pushing up long-term bond yields. The 10-year Treasury yield was 4.66% at midday Thursday, versus just 3.97% in late February before the war broke out.

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The Fed backdrop

The latest increase in mortgage rates comes a day after the Federal Reserve left its key interest rate unchanged as it wrestles with how to tame stubbornly high inflation, which has been stuck above the central bank's 2% target for more than five years.

The move reflects broader anxiety in bond markets, where investors sold off long-term Treasuries after the Fed held short-term rates steady, with three voting members supporting a rate hike.

Housing market impact

Higher mortgage rates can add hundreds of dollars a month in costs for borrowers, limiting homebuyers purchasing power and leading prospective home shoppers to delay buying, one reason U.S. home sales have been sluggish this year.

Seasonally adjusted sales of previously occupied U.S. homes were up 0.7% from January to June compared with the same period last year, but they are still hovering close to a 4-million annual pace far short of the historic norm that is closer to 5.2-million.

Sales of luxury homes, less sensitive to rates because many buyers pay cash, jumped 6.2% in May from a year earlier while they dropped 5.4% for starter homes, with the divergence sharpest in San Francisco, where stock windfalls from artificial intelligence companies are driving demand.

Options market and stocks to watch

Rate-sensitive housing names are the obvious first stop. Watch for:

DHI and LEN: Homebuilders that tend to trade inversely to the 10-year yield. Watch for weakness if rates keep drifting higher.

XHB: The homebuilder ETF, a cleaner read on sector sentiment as affordability tightens.

Z and RKT: Real estate and mortgage originator names. Watch for pressure on volumes if refi demand stalls at these levels.

TLT: The long-duration Treasury ETF is the direct proxy for the yield story driving mortgages. Follow it for the next leg in rates.

Also keep an eye on other news as bond markets react to the Fed and inflation data.

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