U.S. mortgage rates reach their highest in over a year, hampering affordability and dampening housing market momentum

Mortgage costs in the U.S. have climbed to their highest levels since July 2025, pushing more potential buyers out of the market and adding further strain to an already sluggish housing sector amid rising bond yields and inflation worries.

U.S. mortgage costs have climbed to their highest level in more than a year, stretching affordability further out of reach for many would-be buyers and adding fresh pressure to a housing market already struggling for momentum.

According to The Associated Press, the average rate on a 30-year fixed mortgage rose for a fifth straight week to 6.69%, the highest since July 2025. That is only a modest increase from the prior week, but it is enough to keep monthly payments elevated and trim the borrowing power of households trying to buy a home.

A separate measure from the Mortgage Bankers Association, cited by Axios, put the average 30-year rate even higher at 6.81% in early August, with refinance and purchase applications both falling and overall mortgage demand down 2.9%. Mike Fratantoni, the MBA’s chief economist, said both refinancing and purchase activity were running behind last year’s pace as higher borrowing costs discouraged borrowers.

Rates remain closely tied to bond markets, and AP reported that the 10-year Treasury yield has moved higher as investors reacted to inflation worries and the impact of the U.S.-Iran conflict on oil prices. The spread between Treasury yields and retail mortgage rates has also narrowed in recent years, limiting the room for mortgage rates to fall even when bond markets ease.

There was some relief in the latest trading, with bond yields and mortgage rates easing slightly as tensions in the Middle East showed signs of cooling. But for now, the broad trend remains higher, and that is likely to keep pressure on home sales, refinancings and affordability in the weeks ahead.