Homeowners

Mortgage Rates Rise Above 7% for First Time Since January 2025

Mortgage interest rates rose above 7% this week for the first time in 20 months as Treasury yields climbed.

The average rate for a 30-year, fixed-rate mortgage increased to 7.03% for the week ending Sept. 24, according to Freddie Mac. That’s up from 6.95% last week and 6.3% a year ago.

Despite the increase in borrowing costs, Freddie Mac pointed to strength in the broader economy as a source of support for the housing market.

“The housing market remains supported by a solid labor market and an economy that is growing at a healthy rate,” Freddie Mac Chief Economist Sam Khater said in a statement.

The latest increase follows several weeks of upward movement in borrowing costs. Mortgage rates jumped 19 basis points the previous week, the largest one-week increase since April 2025.

The 10-year Treasury yield, which mortgage rates tend to follow, reached 5.11% on Wednesday, its highest level since July 2007, according to Realtor.com.

For homebuyers, the return of 7% rates comes at a point in the year when the housing market typically becomes less competitive.

“A 7% handle is as much psychological as mathematical, and it arrives at the point in the season when leverage usually shifts toward buyers,” wrote Realtor.com Senior Economist Anthony Smith.

More negotiating power can create opportunities for homebuyers to ask for a lower price, repairs, closing costs, or seller concessions that could be used toward a mortgage-rate buydown.

Some borrowers are also turning to adjustable-rate mortgages (ARMs) as an alternative to higher fixed rates.

The average contract rate for a 5/1 ARM fell to 6.1% last week, more than a full percentage point below the 7.12% average contract rate for a 30-year, fixed-rate conforming mortgage, according to the Mortgage Bankers Association (MBA).

“With fixed rates much higher, more borrowers opted for ARMs, with the ARM share reaching 9.8 percent, as rates for 5/1 ARMs were more than a percentage point lower than those for fixed rate loans,” said MBA Senior Vice President and Chief Economist Mike Fratantoni.

Higher borrowing costs have weighed somewhat on mortgage demand. Overall mortgage applications declined 1.5% for the week ending Sept. 18, according to MBA.

Purchase applications edged down 1% on a seasonally adjusted basis. The relatively small weekly decline suggests homebuyers remained active even as mortgage rates moved higher.