Mortgage rates surged past the 7% threshold for the first time since January 2025 this week, propelled by skyrocketing Treasury yields and energy shocks stemming from the U.S.-Iran war.
The average rate on 30-year fixed home loans hit the 7.03% mark for the week ending Sept. 24, up 8 basis points from 6.95% the previous week, according to Freddie Mac. For perspective, rates averaged 6.3% one year ago.
“The housing market remains supported by a solid labor market and an economy that is growing at a healthy rate,” says Sam Khater, Freddie Mac’s chief economist.
Although daily mortgage indicators have flickered above 7% in recent weeks, this is the first time in 20 months that Freddie Mac’s weekly average has topped the key threshold.
This latest readout comes on the heels of a 19-basis point jump recorded on Sept. 17, which marked the largest one-week increase since April 2025.
Realtor.com® senior economist Anthony Smith explains that the 10-year Treasury yield, which mortgage rates closely track, drove the bulk of the recent surge. On Wednesday, the yield reached 5.11%—its highest level since July 2007.
This spike is tightly linked to escalating inflationary pressures, with Brent crude oil prices hovering above $100 per barrel due to war-related supply disruptions and the ongoing closure of the Strait of Hormuz, a key shipping artery.
At its September meeting last week, the Federal Open Market Committee (FOMC) raised the federal funds rate by a quarter point to a range of 3.75% to 4% in a bid to rein in inflation. Since then, central bank officials have maintained a hawkish tone in their public messaging.
In remarks at the Chicago Fed’s housing affordability summit, Gov. Michael S. Barr acknowledged his support for the unanimous decision to hike. He argued the Fed had been “out of position” given changes in the economy, and said his base case is that “further policy adjustments are likely to be needed to bring inflation back to target in a timely fashion.”
Barr also noted that roughly half of outstanding mortgages still carry a rate of 4% or below, which keeps existing owners locked in place, constraining inventory.
Realtor.com research shows that lock-ins remain a dominant force within housing, and the current mortgage rate environment adds to these dynamics.
“For buyers and sellers, the highest mortgage rates in more than a year and a half are landing on a market that is in the midst of a slowdown,” says Smith.
Existing home sales hit their 2026 low in August and pending sales have turned negative year over year.
“A 7% handle is as much psychological as mathematical, and it arrives at the point in the season when leverage usually shifts toward buyers,” adds the economist.
Home shoppers are advised to rate-proof their budgets rather than react to each weekly print. Realtor.com analysis of mortgage rate volatility since 2000 finds that buyers three months out from closing should plan for 50 basis points of movement in either direction, meaning anything between 6.5% and 7.5% from here, a swing worth roughly $30,000 in purchasing power on a $2,000 monthly principal and interest budget.
For sellers, the question is still whether to cut prices as a greater share have recently done, or pull the listing.
“Either way, this will continue to add to the headwinds in place for home sales,” forecasts Smith.
Housing market maintains resilience
Despite these hurdles, Realtor.com weekly housing data signals that the market remains on relatively stable footing.
The typical for-sale home spent 61 days on the market, one da less than a year ago, where mortgage rates were trending downward.
Meanwhile, new listing activity ticked up 0.9% year over year, that despite the lock-in effect bolstered by rising mortgage rates.
Economists attribute this resilience to record-high real estate values and homeowner equity, which give long-time homeowners a sizable financial cushion to make a move even in a high-rate environment.
How your credit score affects your mortgage
Your credit score plays a role when you apply for a mortgage. A credit score will determine whether you qualify for a mortgage and the interest rate you’ll receive. The higher the credit score, the lower the interest rate you’ll qualify for.
The credit score you need will vary depending on the type of loan. A score of 620 is a “fair” rating. However, people applying for a Federal Housing Administration loan might be able to get approved with a credit score of 500, which is considered a low score.
Homebuyers with credit scores of 740 or higher are typically considered to be in very good standing and can usually qualify for better rates, which can reduce monthly payments.
Different types of mortgage loan programs have their own minimum credit score requirements. Some lenders have stricter criteria when evaluating whether to approve a loan. Ultimately, they want to make sure you’re able to pay back the loan.
