\n Homebuyers could soon have to face an unwelcome milestone: a 7% mortgage rate.\n <\/p>\n
\n The average 30-year fixed mortgage rate inched closer to that level this week, climbing to 6.95%, up from 6.76% last week, according to Freddie Mac. It\u2019s the fourth-straight week of rising rates and the largest one-week jump in mortgage rates in 16 months.\n <\/p>\n
\n Mortgage rates are at their highest level since the week of January 30, 2025, the first full week of President Donald Trump\u2019s second term.\n <\/p>\n
\n Higher mortgage rates could be a setback for would-be home buyers waiting on the sidelines. The difference between locking in a mortgage earlier this year when rates were closer to 6% and doing so today could add tens of thousands of dollars to mortgage payments over a 30-year loan on a typical home.\n <\/p>\n
\n And the recent significant moves higher may be scaring off some buyers.\n <\/p>\n
\n Mortgage applications to buy a new home dropped 19% last week compared with the same week a year ago, according to Mortgage Bankers Association data released Wednesday.\n <\/p>\n
\n Applications to refinance existing mortgages plunged 65% compared to this time last year, the report said.\n <\/p>\n
\n The number of homes under contract has also fallen, compared to last year, according to new data released Thursday.\n <\/p>\n
\n Pending home sales rose 0.3% in August from July, but fell 4.7% from a year ago, according to the National Association of Realtors.\n <\/p>\n
\n \u201cThe housing market is still sluggish, with contract signings below last year,\u201d said NAR chief economist Lawrence Yum. \u201cThis is due to higher mortgage rates offsetting the increased buying power created by job gains and income growth outpacing home price growth.\u201d\n <\/p>\n
\n Earlier this year, there was a moment of hope that mortgage rates could move lower. The average 30-year fixed mortgage rate even briefly dropped below 6%<\/a> in February for the first time in three years. But the outbreak of war in Iran and the subsequent climb in oil prices and overall inflation have pushed mortgage rates higher over the past few months.\n <\/p>\n \n Mortgage rates loosely track the 10-year Treasury yield, which moves on investors\u2019 inflation expectations and affects borrowing rates throughout the economy.\n <\/p>\n \n Lately, the bond market, including the 10-year Treasury, has been roiled by the effects of the Middle East conflict and concerns about an explosion of government spending amid mounting national debt. Yields move in the opposite direction of bond prices and this week, the 10-year Treasury yield hit its highest level since 2007<\/a>.\n <\/p>\n