US Mortgage Rates Hit Three-Year High as Borrowing Costs Rise

The average rate on a popular US 30-year fixed-rate mortgage has climbed to 7.40%, its highest level in nearly three years, adding further pressure to a housing market already struggling with affordability.

The Federal Home Loan Mortgage Corporation (FHLMC), popularly known as Freddie Mac, said on October 8 that the previous week’s average rate rose from 7.28% to 7.40%, its seventh consecutive weekly increase. This represents an increase of 1.1 percentage points from a year ago (6.30%). The average rate on a 15-year fixed mortgage also increased, reaching 6.73%, up from 6.60% a week earlier.

The latest rise comes amid growing inflation concerns and higher Treasury yields, as energy prices have increased in the US due to the war with Iran. It also comes just two weeks after the Federal Reserve Bank (Fed) raised interest rates for the first time since 2023, from 3.75% to 4%.

Meanwhile, the housing market remains under pressure from elevated home prices and subdued sales. Sales of previously owned homes fell 2% in August from July to a seasonally adjusted annual rate of 3.98 million, their slowest pace in more than a year, according to the National Association of Realtors.

Mortgage applications have also declined for five consecutive weeks, while refinancing applications have fallen to their lowest level since January 2025 and to less than half their level a year earlier.