Average U.S. mortgage rate hits highest level in nearly 3 years

Mortgage rates have reached a level not seen in nearly three years, climbing to 7.40% for the benchmark 30-year fixed-rate loan, according to Freddie Mac. Since last week, the average rate has risen from 7.28%. A year ago, the rate was 6.30%, making the present figure the highest since November 16, 2023. Rising mortgage rates have hindered the housing market, as they increase monthly costs for homeowners and limit the purchasing power of prospective buyers.

Fifteen-year fixed-rate mortgages, often utilized by borrowers refinancing their home loans, also rose to 6.73% from 6.60%. This increase is attributed to the U.S. war with Iran, which has led to bond market volatility and heightened inflation concerns. The 10-year Treasury yield, a key indicator for mortgage rates, has surged to its highest level since 2002 due to these factors.

The recent mortgage rate increase translates to an additional $376 per month for a borrower financing a $400,000 home loan. As a result, many potential homebuyers are delaying their home buying plans, and refinance applications have plummeted to their lowest level since January 2025.