The days of mortgage rates below 7% may be numbered.
This week’s global sell-off of government bonds may only be seen as big news in the investment world but it’s also affecting everyday consumers by pushing mortgage rates up toward 7%, a level largely not seen since January 2025.
As of Thursday, the weekly average rate for a 30-year fixed-rate mortgage in the U.S. jumped to 6.71%, according to the Federal Home Loan Mortgage Corporation, better known as Freddie Mac, a 0.05-percentage-point increase from the previous week and the highest in more than a year.
At Mortgage News Daily, the rate index posted each day climbed as high as 6.91% this week before dipping slightly to 6.88% as of midday Thursday. The site’s Matthew Graham warned Wednesday that “many borrowers are already seeing rates at 7% or higher.”
Years of high mortgage rates
A Wednesday article in The Wall Street Journal advised that “the bond selloff is likely to deal another blow to a housing market hobbled by four years of high borrowing costs,” because mortgage rates are tied to the yield on 10-year U.S. Treasury bonds, now at a three-year high.
“This is going to push mortgage rates much closer to 7%,” Mark Fleming, chief economist at First American, told The Wall Street Journal. He said that “certainly will reduce affordability, particularly for the potential first-time home buyer.”
Mortgage rates reached record lows set during the COVID-19 pandemic that sparked a home-buying frenzy, then more than doubled to 7% and above amid Federal Reserve interest rate hikes intended to control inflation.
By February of this year, mortgage rates had fallen below 6% for the first time since 2022. But what was seen as good news for housing affordability didn’t last. Soon after, the U.S. and Israel launched an ongoing war against Iran, fueling rapid rises in consumer costs.
It’s concern over the war continuing, as well as a national debt hitting $40 trillion and the possibility of the first Fed rate hike in more than three years, that “are rattling global bond markets,” according to The Wall Street Journal.
‘Not a time to panic’
“It seems most folks aren’t keeping a close eye on bond markets, but they really do influence consumers, particularly when it comes to mortgages,” Jeremy Holmgren, senior vice president of Zions Bank Mortgage, told the Deseret News.
What he termed a sharp bond-market selloff has put pressure on mortgage rates, Holmgren said, but cautioned homebuyers that the impact of a potential 7% rate “is more psychologically worse than it is economical.”
Mathematically, a 7% mortgage rate isn’t “dramatically different” than one at 6.75%, he said. “The bigger issue is where rates are headed and whether buyers can comfortably afford the payment today.”
He said consumers need to know what their mortgage options are.
“That’s why it’s always important to have a mortgage expert who knows and understands their situation. With the economy continuing to shift and change, it could be worthwhile to have that mindset when it comes to your mortgage,” Holmgren advised.
Buyers who choose not to sit on the sidelines may benefit from “less competition and potentially more leverage with sellers, particularly with the inventory that is continuing to build here in Utah,” he said. “This is a time to be strategic, not a time to panic or leave the market.”