Mortgage rates rose for a fourth week, coming ever closer to 7%, a threshold that stands to worsen things for borrowers in the already-stalled U.S. housing market.
The average for a 30-year, fixed loan climbed to 6.95% from 6.76% a week earlier, Freddie Mac said in a statement Thursday. The rate hasn’t been this high since January 2025. By comparison, it was 6.26% a year ago.
For would-be buyers who had hoped for some relief in 2026, rates approaching 7% come as the latest disheartening development and a sign, after the Federal Reserve raised interest rates by a quarter percentage point on Wednesday, that borrowing expenses may not settle down any time soon.
The rising costs of homeownership are becoming a central issue in the upcoming November midterms. And, despite the Trump administration’s efforts to shore up the market by purchasing bonds and cutting regulations, a quick turnaround for housing looks increasingly unlikely.
“It’s too little and absolutely too late,” said Brad Case, chief residential economist for Homes.com. “What voters are unhappy about is affordability and that’s both homebuyers and renters, and everybody who fills their car tank with gas.”
To pay for an average-priced home of $440,000, Intercontinental Exchange Inc. estimates that it would require 31% of the median household’s income for the mortgage payment, the highest share since July 2025. At the same time, confidence among homebuilders tumbled this month to the lowest level in a year.
And borrowing costs remain a headwind. The Federal Open Market Committee voted unanimously to increase the benchmark federal funds rate to a range of 3.75% to 4% and penciled in an additional hike for later this year. The increase, the first since July 2023, was widely anticipated by investors, with policymakers under growing pressure to contain inflation.
The impact has filtered through to housing. The yield on 10-year Treasury notes, which guides mortgage rates, has fallen since the Fed’s rate decision to trade just shy of 5%.
“The recent run-up in rates is hitting an already slow housing market, where sales volume has started to decline year over year from an already low baseline,” said Mischa Fisher, Zillow Group Inc.’s chief economist. However, “greater market confidence in inflation being under control is more likely to bring mortgage rates lower in 2027 and get the recovery back on track.”
The National Association of Realtors reported Thursday that pending home sales increased 0.3% in August from the prior month, but were down almost 5% from a year earlier.
With higher borrowing costs straining affordability, housing officials are looking for other ways to make mortgages more accessible. The Federal Housing Finance Agency has directed Freddie Mac and Fannie Mae to allow lenders to use VantageScore 4.0, a change that may help some prospective homebuyers qualify for loans.
Widespread adoption by underwriters will take time, but Marat Tsirelson, president of the Lending Group in Southampton, Pennsylvania, said it has already benefited a customer.
Tsirelson said he recently helped a family purchase a brick rowhouse in the working-class neighborhood of Port Richmond in Philadelphia. Using a new VantageScore, he got them an approval from Fannie Mae’s automated underwriting system for borrowers who would have been rejected under the traditional FICO scoring model.
“It’s been a little slow to take effect,” Tsirelson said. “We couldn’t help certain first-time buyers, now we can.”
The Federal Housing Administration plans to begin accepting mortgage collateral backed by the VantageScore 4.0 credit-scoring model on Jan. 1.
Meanwhile, even the most optimistic analysts have been forced to scale back their expectations.
Late last year, National Association of Realtors Chief Economist Lawrence Yun had one of the most upbeat outlooks for the U.S. housing market: Existing-home sales would rise 14% in 2026, powered by mortgage rates drifting lower toward 6% on average.
By spring, the war in Iran had upended his predictions. He now expects existing-home sales to rise just 4% this year, according to a June update, and even that “could be difficult if mortgage rates continue to increase,” Yun said. His revised estimate assumed mortgage rates would average 6.5% in 2026.
“When mortgage rates touched down at 6% at the early part of the year, that generated some excitement psychologically about the non-serious buyer possibly becoming the serious buyer,” Yun said. “Now oppositely, as mortgage rates are going up to 7%, people who are somewhat thinking about buying a home suddenly begin to say, ‘That’s out of my picture now.’”
This article was provided by Bloomberg News.
Facts Only
* The average rate for a 30-year, fixed loan climbed to 6.95% from 6.76% the prior week, according to Freddie Mac.
* This rate has not been at this level since January 2025; it was 6.26% one year prior.
* The Federal Open Market Committee increased the benchmark federal funds rate to a range of 3.75% to 4% and penciled in further hikes for later in the year.
* The yield on 10-year Treasury notes, which guides mortgage rates, has fallen since the Fed’s rate decision to trade just under 5%.
* Pending home sales increased by 0.3% in August from the prior month but were down almost 5% from a year earlier.
* Intercontinental Exchange Inc. estimates that an average-priced home of $440,000 requires 31% of median household income for the mortgage payment.
* Confidence among homebuilders fell to the lowest level in a year this month.
* The Federal Housing Finance Agency directed Freddie Mac and Fannie Mae to allow lenders to use VantageScore 4.0.
Executive Summary
Full Take
The trajectory of rising rates, pushing costs toward 7%, reveals a significant divergence between macroeconomic policy aims and real-world market friction. The core pattern observed is the direct transfer of monetary policy into housing affordability, where rate increases immediately translate into reduced purchasing power for potential buyers, as exemplified by the shift in buyer sentiment from hope to apprehension when rates move up. This dynamic suggests that external financial pressures are overriding localized market activity, creating a scenario where even modest recovery signals are met with systemic hesitation.
The tension between macroeconomic forecasts and on-the-ground realities is telling. While some analysts anticipate future rate normalization based on inflation control, the experience of voters indicates that affordability remains the central focus for the public, suggesting that economic modeling alone does not capture the psychological barrier to entry for housing. The introduction of tools like VantageScore 4.0 represents an attempt to mitigate this structural friction by decoupling traditional credit assessments from immediate application, acknowledging that existing risk models may fail to capture new forms of borrower capacity.
The pattern points toward a systemic challenge: when foundational economic variables shift rapidly, the resulting social consequences are felt disproportionately by those in the housing market. The historical optimism regarding rate decreases acting as an automatic catalyst for buying is being inverted; higher rates create a perception that opportunities have vanished, regardless of underlying liquidity or inflation targets. The real implication is that managing the housing market requires addressing both interest rate mechanics and public confidence simultaneously to re-establish agency for potential buyers.
Bridge Questions: If affordability remains the primary concern, what structural changes are necessary beyond lending score adjustments to meaningfully increase access to ownership? How can policymakers effectively manage public expectation when economic indicators conflict with voter sentiment regarding housing costs? What is the long-term relationship between perceived stability in inflation and sustained market recovery?
Sentinel — Human
The text functions as a standard news report synthesizing economic data and expert commentary regarding mortgage rates and the housing market, exhibiting clear journalistic structure despite minor stylistic predictability.