Average 30-year US mortgage rate breaches 7 per cent for first time in over a year

The average rate on a 30-year fixed mortgage has climbed past 7 per cent for the first time in more than a year, dealing a heavy blow to prospective buyers already struggling with a stagnant housing market.

Borrowing costs surged on Thursday to reach 7.07 per cent, according to figures compiled by Mortgage News Daily. The 10-basis-point jump in a single day marks the first time the average rate for the popular 30-year loan has breached the 7 per cent threshold since May 2025.

Why are mortgage rates rising?

Mortgage rates do not directly mirror central bank decisions; instead, they loosely track the yield on the 10-year US Treasury note. That yield rose sharply on Thursday as global oil prices surged, eclipsing the news that US wholesale inflation rose by a predictable 0.4 per cent in August, a figure that matched consensus estimates.

"It’s been a rough couple of days for the bond market," Matthew Graham, chief operating officer at Mortgage News Daily, said. He noted that yields were already under pressure on Wednesday following Treasury Secretary Bessent’s announcement of a Treasury buyback scheme, leaving the market highly vulnerable to the overnight spike in oil prices.

The broader upward march began at the end of February, triggered by the outbreak of the war in Iran. Before the conflict began, rates had dipped to a recent low of 5.99 per cent, but the geopolitical shock has since kept investors on edge and drove energy prices higher.

How much more will homebuyers pay?

For house hunters, the steady climb over the spring and summer has added hundreds of dollars to the cost of purchasing a home.

A buyer purchasing a $430,000 property—roughly the US national median—with a 20 per cent down payment will now have to pay $244 more each month in principal and interest than they would have at the end of February. Over the course of a year, that adds nearly $3,000 to the cost of financing the same home.

What does this mean for the housing market?

The sudden rise in borrowing costs comes as the American property market displays unusual signs of strain. A monthly report on existing home sales showed that transactions are falling even though the overall supply of homes on the market has actually improved.

Usually, higher supply dampens prices, but home prices have continued to rise, leaving buyers squeezed by both record valuations and high interest rates.

Wall Street responded to the data rapidly on Thursday, with shares in major US homebuilders sliding as investors braced for a further chill in home sales. With rates back above the psychologically important 7 per cent mark, any hopes of an autumn rebound in the housing market are fading fast.