Mortgage rates jump to a 6-month high, squeezing spring homebuyers

U.S. mortgage rates have surged to their highest level in more than six months, creating additional hurdles for potential homebuyers during what is traditionally the busiest homebuying season of the year.

The benchmark 30-year fixed-rate mortgage climbed to 6.38% from 6.22% last week, according to data released Thursday by mortgage buyer Freddie Mac. This represents the largest one-week increase since April 2025 and the most substantial three-week jump since October 2024, as reported by Realtor.com. The last time rates reached this high was September 4, when they hit 6.5%.

Just four weeks ago, the average rate had fallen below 6% for the first time since late 2022, offering a brief window of opportunity for buyers. However, that reprieve has evaporated as skyrocketing oil prices related to tensions with Iran have heightened inflation concerns.

The 15-year fixed-rate mortgage, often used by homeowners for refinancing, also saw an increase, rising to 5.75% from 5.54% last week. A year ago, that rate stood at 5.89%.

These rising borrowing costs add hundreds of dollars to monthly mortgage payments, significantly restricting what prospective buyers can afford in an already challenging housing market.

Mortgage rates are influenced by several economic factors, primarily following the trajectory of 10-year Treasury yields. At midday Thursday, the 10-year Treasury yield reached 4.39%, up from approximately 4.26% a week earlier. This increase has been driven by higher oil prices, which have fueled expectations for persistent inflation.

“Rising mortgage rates are a major barrier to what should otherwise be a very favorable spring homebuying season,” said Joel Berner, senior economist at Realtor.com.

The Federal Reserve’s monetary policy decisions also play a critical role in shaping mortgage rate trends. While the Fed doesn’t directly set mortgage rates, its actions influence bond investor behavior, ultimately affecting Treasury yields. At its recent meeting, the Federal Reserve opted to maintain current interest rates rather than implementing cuts, with Chair Jerome Powell highlighting economic and inflationary uncertainties following the conflict with Iran.

The impact of rising rates is already becoming evident in buyer behavior. According to the Mortgage Bankers Association, mortgage applications dropped 10.5% last week from the previous week, with decreases in both purchase and refinancing applications.

“Higher borrowing costs, affordability pressures and economic uncertainty are likely prompting some prospective buyers to delay purchase decisions,” said MBA CEO Bob Broeksmit.

The U.S. housing market has struggled since 2022, when mortgage rates began climbing from their pandemic-era lows. Sales of previously occupied homes remained at a 30-year low last year and have continued to show weakness in early 2023, with declines in both January and February compared to the previous year.

Despite these challenges, the current mortgage rate remains below where it stood a year ago, potentially benefiting buyers who can afford to enter the market at present rates. These buyers may also find advantages in other market trends, including a slowing pace of home price growth in many metropolitan areas and increased housing inventory compared to last year.

However, for many Americans, the recent rate increases only exacerbate affordability challenges, particularly as wage growth has failed to keep pace with the dramatic rise in home prices throughout much of the past decade.

The housing market’s trajectory in the coming months will likely depend on several factors, including inflation trends, Federal Reserve policy decisions, and overall economic stability. For now, the spring homebuying season faces significant headwinds as potential buyers recalibrate their expectations in response to the changing financial landscape.