US mortgage rates hit one-year high

The average 30-year fixed mortgage rate in the United States rose to 6.66% this week, up from 6.58% the previous week. This level is the highest since July 31, 2025, when the average stood at 6.72%. The latest increase extends a recent trend of rising long-term borrowing costs for homebuyers.

Shorter-term mortgage rates moved higher as well. The average rate on 15-year fixed-rate mortgages rose to about 6.04% this week, compared with roughly 5.96% a week earlier. These increases add to the cost of financing for both new buyers and homeowners considering refinancing.

Rising mortgage rates have coincided with a decline in mortgage market activity. Total mortgage applications, covering both home-purchase and refinancing loans, fell 6.4% from the previous week. The drop suggests that higher borrowing costs are weighing on demand for new loans and refinancing.

The decline in applications reflects the reduced affordability that comes with higher interest rates. As rates climb, monthly payments on new mortgages increase, which can limit the number of borrowers who qualify or are willing to take on new debt.

The mortgage rate increases are occurring against a backdrop of steady short-term policy rates. At its late-July meeting, the Federal Reserve left its benchmark short-term interest rate unchanged. This decision kept the main policy rate at its existing level despite ongoing concerns about inflation.

The vote to hold rates steady was not unanimous. Three regional Federal Reserve bank presidents dissented in favor of raising the benchmark rate. Their dissent highlights differing views within the central bank on how restrictive policy should be, even as longer-term market rates such as mortgages continue to move higher.

The combination of higher mortgage rates and falling application volumes underscores the pressure on housing affordability. With the average 30-year rate now at its highest point in roughly a year, potential buyers face higher monthly payments than in recent months. This environment can slow transaction activity and make it more difficult for some households to enter the market.

While the Federal Reserve has held its policy rate steady, movements in longer-term yields are feeding through to consumer borrowing costs. The latest data on rates and applications indicate that these market dynamics are already affecting behavior in the mortgage and housing sectors.