US Mortgage Rates Reach 7% a Year, Hitting a Psychological Threshold

August Home Sales Fall 2% From a Month Earlier

Some Sellers Pull Listings as Demand Weakens

US mortgage rates are nearing 7% a year, further freezing homebuying sentiment.

Freddie Mac, the government-backed mortgage finance company, said on September 16 that the average rate on a 30-year fixed mortgage was 6.76% last week. By Mortgage News Daily's daily measure, the rate has already topped 7%.

The rise reflects a recent move in the yield on the 10-year US Treasury, a benchmark for a range of borrowing costs, above 5%. US mortgage rates were still in the 5% range as recently as February, but they began climbing sharply after the outbreak of the Iran war. Rates have risen further as persistent US inflation and Treasury selling tied to the government's fiscal deficit pushed yields higher.

As mortgage rates approach the 7% psychological threshold, homebuying sentiment has started to weaken. Existing-home sales in August fell 2% from a month earlier to a seasonally adjusted annual rate of 3.98 million, according to the National Association of Realtors. That was the lowest level since June 2025. The difference in total interest payments over 30 years between someone who bought a home in February and a buyer entering the market now has widened to several hundred thousand dollars. Michael Fratantoni, chief economist at the Mortgage Bankers Association, said mortgage applications and home-sale contracts would decline if rates keep rising at the current pace.

Record-high US home prices are also prompting buyers to stay on the sidelines. Zillow economist Kara Ng said more homeowners are pulling listings and waiting to try selling later as demand weakens. The industry sees a strong possibility that high mortgage rates will become the new normal.

Kim Mi-ri, Hankyung.com reporter mirimiri@hankyung.com