Average rate on a US 30-year mortgage rises to 6.89%, its highest level since early February

Key Points

• The average rate on a 30-year mortgage rose to 6.89% this week, its highest level since early February, up from 6.86% last week.
• Rates on 15-year fixed-rate mortgages also ticked higher to 6.03%, though they remain below last year’s 6.36% average.
• Mortgage rates are being driven higher by rising bond yields, fueled by investor uncertainty over tariffs and mounting federal debt.
• These elevated rates have reduced borrowing power for homebuyers, contributing to a prolonged slump in U.S. home sales to near three-decade lows.

The average rate on a 30-year mortgage in the U.S. rose this week to its highest level since early February, further pushing up borrowing costs for homebuyers.

The rate increased to 6.89% from 6.86% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 7.03%.

Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also rose. The average rate ticked up to 6.03% from 6.01% last week. It’s still down from 6.36% a year ago, Freddie Mac said.

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. The key barometer is the 10-year Treasury yield, which lenders use as a guide to pricing home loans.

Bond yields have been trending higher, reflecting bond market investors’ uncertainty over the Trump administration’s ever-changing tariffs policy and worry over exploding federal government debt.

The 10-year Treasury yield was 4.43% in midday trading Thursday, down from 4.47% late Wednesday.

The average rate on a 30-year mortgage has remained relatively close to its high so far this year of just above 7%, set in mid-January. The average rate’s low point so far was six weeks ago, when it briefly dropped to 6.62%. After rising for three straight weeks, the average rate is now at its highest level since Feb. 6, when it averaged 6.89%.

High mortgage rates, which can add hundreds of dollars a month in costs for borrowers, have reduced purchasing power for many prospective homebuyers this year. That’s helped keep the U.S. housing market in a sales slump that dates back to 2022, when mortgage rates began to climb from the rock-bottom lows they reached during the pandemic.

Last year, sales of previously occupied U.S. homes sank to their lowest level in nearly 30 years. Sales fell last month to the slowest pace for the month of April going back to 2009.

Rising mortgage rates have helped dampen sales during what’s traditionally the peak period of the year for home sales. Mortgage applications fell 1.2% last week from a week earlier as home loan borrowing costs rose, according to the Mortgage Bankers Association. Applications for a loan to buy a home were up 18% from a year earlier.

New data suggest sales could slow further in coming months. An index of pending U.S. home sales fell 6.3% last month from March and declined 2.5% from April last year, the National Association of Realtors said Thursday.

There’s usually a month or two lag between a contract signing and when the sale is finalized, which makes pending home sales a bellwether for future completed home sales.

“At this critical stage of the housing market, it is all about mortgage rates,” said Lawrence Yun, NAR’s chief economist. “Despite an increase in housing inventory, we are not seeing higher home sales. Lower mortgage rates are essential to bring home buyers back into the housing market.”

Economists expect mortgage rates to remain volatile in coming months, with forecasts calling for the average rate on a 30-year mortgage to range between 6% and 7% this year.